Pharma Portfolio

In a significant move to bolster its pharma portfolio, Eli Lilly has announced the acquisition of Dice Therapeutics for a staggering $2.4 billion. This strategic deal provides Lilly with access to a promising oral medication for autoimmune diseases that is currently in clinical trials. The acquisition of Dice, a young biotechnology startup that went public in 2021, will be completed through a cash transaction at $48 per share. This price reflects a substantial 42% premium over the closing price of Dice shares and a 40% premium over the monthly average trading price.

The completion of the acquisition is subject to regulatory approval and obtaining the majority of Dice’s outstanding shares. It is expected to be finalized in the third quarter of this year. Although the premium paid by the buyer is comparatively lower than other deals in 2023, it marks the sixth-largest acquisition in the biotech sector this year. The industry has experienced a recent surge in dealmaking, with eleven buyouts announced since mid-March, six of which occurred after May 10. Consequently, a biotech stock index measuring the sector’s health has surged by approximately 20% during this period.

By acquiring Dice, Lilly is placing a strategic bet on the potential of oral medications being developed for autoimmune diseases, including psoriasis. The company aims to compete favorably with existing injectable biologic medications while offering the convenience of oral tablets. Notably, several pharmaceutical companies are also researching oral medications that target the TYK2 protein, such as Sotyktu from Bristol Myers Squibb, which received FDA approval for psoriasis treatment last year. Takeda and Ventyx Biosciences are among the other companies developing similar medications.

Dice’s focus lies in medications that target IL-17, a protein crucial for immune system regulation. IL-17 is the key target of drugs like Novartis’ Cosentyx and Lilly’s Taltz, both of which are injectable medications. Aceylrin, a new biotech company that recently raised over $500 million in an IPO, is also developing oral IL-17 medications. Additionally, Sanofi and biotech Leo Pharma are working on their own versions of oral IL-17 drugs.

Dice Therapeutics gained attention in the market when it released preliminary findings from a Phase 1 psoriasis study last October, leading to an increase in its stock price. The company is currently enrolling patients with moderate-to-severe illness for a larger mid-stage study, which is expected to conclude in 2024. Additionally, Dice is working on a second drug intended to be more effective, with early-stage findings anticipated by the end of this year.

Despite the ongoing market downturn, Dice is among the few biotech firms that have maintained their stock market gains since going public in 2021. Prior to the merger announcement, Dice’s shares were trading at nearly double their IPO price of $17 per share in September 2021. This indicates the market’s confidence in the company’s potential and the prospects of its research.

In summary, Eli Lilly’s acquisition of Dice Therapeutics for $2.4 billion marks a significant step in expanding its pharmaceutical portfolio. With access to potential oral medications for autoimmune diseases, Lilly aims to position itself as a strong player in this therapeutic area. 

 

Eli Lily’s Pharma Portfolio

Previously, Lilly had been researching oral substitutes for autoimmune diseases. However, in 2022, the company discontinued the development of one of its own candidates due to liver damage discovered during a Phase 1 investigation. With the acquisition of Dice, Lilly gains access to promising research and development in this field.

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