Eli Lilly will acquire Morphic Holding for USD 3.2 billion, enhancing its portfolio with Morphic's oral integrin therapies for chronic diseases, including advanced IBD treatments.

United States:  Eli Lilly and Company has entered a definitive agreement to acquire Morphic Holding, Inc., a biopharmaceutical company specializing in oral integrin therapies for chronic diseases.

Morphic’s lead program, MORF-057, is a selective oral small molecule inhibitor of α4β7 integrin for treating inflammatory bowel disease (IBD). It is currently undergoing evaluation in two Phase 2 studies for ulcerative colitis and one for Crohn’s disease. Additionally, Morphic is advancing a preclinical pipeline targeting autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases, and cancer.

Lilly will initiate a tender offer to purchase all outstanding shares of Morphic for USD 57 per share in cash, totaling approximately USD 3.2 billion. The boards of directors of both companies have approved the transaction.

The deal is not contingent on financing and is anticipated to close in the third quarter of 2024, pending customary closing conditions, including the tender of the majority of Morphic's outstanding common stock shares. Post-closing, Lilly will acquire any remaining Morphic shares through a second-step merger at the same tender offer price.

The closing purchase price represents a premium of about 79.0% over the July 5, 2024, closing stock price and 87.2% over the 30-day volume-weighted average trading price ending July 5, 2024. Morphic's board recommends that shareholders tender their shares.

Lilly will determine the accounting treatment of the transaction as either a business combination or asset acquisition, adhering to GAAP, upon closing. The transaction will then be reflected in Lilly's financial results and guidance.

Daniel Skovronsky, M.D., Ph.D., chief scientific officer of Lilly and president, Lilly Research Laboratories, president, Lilly Immunology said, “Oral therapies could open up new possibilities for earlier intervention in diseases like ulcerative colitis, and also provide the potential for combination therapy to help patients with more severe disease. We are eager to welcome Morphic colleagues to Lilly as this strategic transaction reinforces our commitment to developing new therapies in the field of gastroenterology, where Lilly has made significant investments to deliver first-in-class molecules for the benefit of patients.”

Praveen Tipirneni, M.D., CEO of Morphic Therapeutic commented, “Morphic has always believed that the immense potential of MORF-057 to benefit patients suffering from IBD could be optimized by the ideal strategic partner. Lilly brings unparalleled resources and commitment to the inflammation and immunology field. We built the Morphic Integrin Technology platform to realize the vast opportunity of integrin therapeutics. MORF-057 is a tremendous example of those efforts, an oral small molecule α4β7 inhibitor with the potential to be well tolerated and efficacious, attributes that could unlock new possibilities in IBD treatment. My deepest thanks go to the entire Morphic Team for their expertise, creativity and tenacity. We are also grateful to the investigators and patients who have contributed to the success of MORF-057 thus far, and we eagerly anticipate the path forward for MORF-057 and other integrin medicines under Lilly's stewardship.”

According to TechSci Research, Eli Lilly's acquisition of Morphic Holding, Inc. marks a significant development in the healthcare market, particularly in the treatment of chronic diseases. By acquiring Morphic, Lilly enhances its portfolio with promising oral integrin therapies, including MORF-057, which is in advanced clinical trials for inflammatory bowel disease (IBD). This acquisition positions Lilly to offer innovative treatment options for patients with ulcerative colitis and Crohn’s disease, potentially improving patient outcomes and expanding its market share in the IBD segment.

The transaction, valued at approximately USD 3.2 billion, underscores the high value and potential of Morphic’s pipeline, which also includes preclinical programs targeting autoimmune, pulmonary hypertensive, fibrotic diseases, and cancer. This strategic move allows Lilly to diversify and strengthen its pipeline with cutting-edge therapies that address unmet medical needs.

The premium purchase price reflects confidence in Morphic's technology and its potential impact on the healthcare market. The acquisition is expected to accelerate the development and commercialization of new therapies, fostering innovation and competition within the biopharmaceutical industry. As a result, patients stand to benefit from a broader array of advanced treatment options, while Lilly solidifies its position as a leader in innovative healthcare solutions.