Pharmaceutical giant Eli Lilly & Co. (LLY) is buying privately held Scorpion Therapeutics’ experimental cancer therapy for $2.5 billion in cash.
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Eli Lilly is purchasing Scorpion’s experimental oral therapy called “STX-478,” which is in early-stage trials for the treatment of breast cancer and other advanced solid tumors. The deal will help Eli Lilly to expand its pipeline of cancer treatments.
Eli Lilly is not buying Scorpion Therapeutics company, only its experimental cancer treatment. The therapy being purchased is a PI3K inhibitor, which selectively targets a type of protein called PI3K that is found in solid cancerous tumors. The deal includes an upfront payment by Eli Lilly to Scorpion, followed by subsequent payments upon certain regulatory milestones for the cancer therapy being reached.
Deal Structure
Under terms of the deal, Scorpion Therapeutics will spinoff a new entity to house its non-PI3K pipeline assets and employees. The new, independent company will be owned by Scorpion’s current shareholders, with Eli Lilly having a minority stake.
“We look forward to leveraging the great work of the Scorpion team to date, along with Lilly’s deep expertise in breast cancer, to further advance STX-478 with speed and focus,” said Jacob Van Naarden, president of Eli Lilly’s Oncology unit in a news release announcing the deal.
LLY stock has risen 26% over the last 12 months.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy rating among 17 Wall Street analysts. That rating is based on 15 Buy and two Hold recommendations assigned in the past three months. The average LLY price target of $1,057 implies 32.66% upside from current levels.
