Eli Lilly and Company completed its acquisition of Loxo Oncology Inc. For $8 billion in cash on Monday, January 7, 2019, a move intended to bolster the pharmaceutical giant’s oncology portfolio with targeted cancer therapies.
The deal, valued at $235.00 per share, represents a 68 percent premium over Loxo Oncology’s closing share price on Friday, January 4, 2019 and is the largest acquisition in Lilly’s 143-year history. Loxo Oncology focuses on the development and commercialization of highly selective medicines for patients with genomically defined cancers.
Loxo gained prominence in 2017 with clinical trial results demonstrating the effectiveness of its drug, larotrectinib, against cancers driven by TRK fusion, regardless of tumor location. The drug received U.S. Approval in November 2018 under the brand name Vitrakvi, and is co-marketed with Bayer AG. Patients with over 17 different types of advanced cancer and the TRK fusion mutation experienced significant improvement with larotrectinib, many of whom had exhausted other treatment options, with approximately 80 percent experiencing dramatic, often long-term, improvement.
The acquisition comes amid a wave of consolidation in the pharmaceutical industry, following Bristol-Myers Squibb’s agreement to acquire Celgene Corp. For $74 billion the previous week. Analysts noted the high premium paid for Loxo Oncology, given that the company had only one drug on the market at the time of the deal, shared with a partner.
The purchase of Loxo Oncology is expected to significantly enhance Lilly’s oncology pipeline, particularly in the area of targeted cancer therapies that address rare genetic mutations. The acquisition also prompted increases in stock prices for other small developers of targeted cancer therapies, including Array BioPharma, Blueprint Medicines Corp, and Clovis Oncology Inc.
Data from a pivotal trial for RET inhibitor selpercatinib, a drug acquired through the Loxo Oncology deal, is expected to support a regulatory filing before the complete of 2026.
