Eli Lilly to acquire Loxo Oncology for USD8 billion

NEW YORK (AFP) – Pharmaceutical giant Eli Lilly announced on Monday it will acquire Loxo Oncology for around USD8 billion, the latest big transaction aimed at developing and monetising new treatments for cancer.

The deal supplements Eli Lilly’s pipeline of cancer-oriented medicines with assets from Loxo, which was incorporated in 2013 and has a number of promising treatments at various stages of development.

Under the terms of Monday’s deal – which follows last week’s USD74 billion announced takeover of Celgene by Bristol-Myers Squibb – Eli Lilly will pay USD235 per share in cash, or about USD8 billion, for the Stanford, Connecticut-based Loxo.

The deal, which represents a premium of some 68 per cent over Loxo Oncology’s closing share price last Friday, is expected to close by the end of the first quarter, the companies said in a statement.

“Using tailored medicines to target key tumour dependencies offers an increasingly robust approach to cancer treatment,” said Lilly’s Chief Scientific Officer Daniel Skovronsky.

This October 12, 2015 file photo shows an employee working in a unit dedicated to the production of insulin pens at the factory of the US pharmaceutical company Eli Lilly in Fegersheim, eastern France. – AFP

Loxo’s portfolio “creates new opportunities to improve the lives of people with advanced cancer”, he added.

A note from Morningstar said the Loxo assets “should fit well with Lilly’s strong position in oncology with already approved cancer drugs,” adding that while Loxo’s products are tailored to narrow patient groups, the “strong efficacy of the drugs should support continued pricing power and robust sales”.

Loxo’s product pipeline is centred on treating patients when there is an inappropriate DNA change that can be discovered through genomic testing. The company aims to develop targetted therapies that can impede the progression of these diseases.

A key driver for the deal because of near-term commercial potential is a treatment for lung, thyroid and some other tumours, Eli Lilly executives said on a conference call.

The treatment was granted the ‘Breakthrough Therapy’ designation by the Food and Drug Administration with a potential launch in 2020, the companies said in the news release.

The Loxo treatments are reflective of a generation of newer cancer remedies that treat specific populations suffering from a particular strand of a cancer, said Associate Professor at Harvard Medical School Anupam Jena.

Whereas a decade ago most patients with lung cancer might have been treated with chemotherapy, a drug being developed by Loxo could be used by fewer than five per cent of patients with a particular strand of lung cancer, Jena said.