Eli Lilly and Company (LLY) on Monday announced that it would acquire a small biopharmaceutical startup that develops cancer treatment, Loxo Oncology (LOXO), for $8 billion, in its largest and latest in a series of transactions to broaden its own portfolio of oncology drugs.
The deal, valued at $235 per share comes at a hefty 68% premium over Loxo’s Friday close. Both the stocks were buoyed by the announced, with Loxo shares opening up 6.7% and Eli Lilly jumping 3.1% on Monday.
The transaction is expected to close in the first quarter of this year.
It may be noted that the company’s experimental cancer drugs have shown very high success rates, and one, Vitrakvi, has currently reached the market. Thanks to the positive results, the stock has gained over 970% since its IPO in 2014.
Lilly’s chief scientific officer Daniel Skovronsky said, “Using tailored medicines to target key tumor dependencies offers an increasingly robust approach to cancer treatment. Loxo Oncology’s portfolio, in combination with advanced diagnostics that allow us to know exactly which patients may benefit, creates new opportunities to improve the lives of people with advanced cancer.”
Lilly said the transaction will reflect in its GAAP financial results, and that it will provide updated guidance along with the fourth quarter results on February 13.
This acquisition comes on the heels of Bristol-Myers Squibb (BMY) acquiring its peer Celgene (CELG) in a $74 billion cash and stock transaction.