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Eli Lilly to buy Armo BioSciences in US$1.6bn all-cash deal

Last updated: 10:25 10 May 2018 EDT, First published: 10:03 10 May 2018 EDT

newspaper copy with word "Cancer" under looking glass
The announcement sent shares of Armo BioSciences soaring

Eli Lilly and Co. (NYSE: LLY) has reached a definitive agreement to acquire Armo BioSciences Inc. (NASDAQ: ARMO) for US$50 a share, or about US$1.6bn, in an all-cash transaction.

Announcement of the deal sent shares of Armo BioSciences soaring. They were up around 67% in mid-morning trading, at US$49.70 a share. Shares of Eli Lilly were up about 1%, at US$80.13 a share.

Eli Lilly plans to begin a tender offer for all the shares of Armo BioSciences, which Lilly describes as "a late-stage immuno-oncology company that is developing a pipeline of novel, proprietary product candidates designed to activate the immune system of cancer patients to recognize and eradicate tumors."

Lilly said the acquisition will bolster its immuno-oncology program through the addition of Armo's lead product candidate, pegilodecakin. Lilly said pegilodecakin is being studied in a Phase 3 clinical trial in treating pancreatic cancer, and is involved in earlier-phase trials in lung and renal cell cancer, melanoma and other solid tumor types.

Sue Mahony, Lilly senior vice president and president of Lilly Oncology, said the planned acquisition of Armo BioSciences "adds a promising next-generation clinical immunotherapy asset to Lilly's portfolio of innovative oncology medicines."

In commenting on the deal, Peter Van Vlasselaer, president and CEO of Armo BioSciences, said, "Given the resources that Lilly, a leader in oncology R&D, can bring to bear to maximize the value of pegilodecakin and the rest of the Armo pipeline, we believe it is in the best interest of Armo, our stockholders and the patients we serve, to execute this transaction."

Lilly said it expects to close the transaction by the end of the second quarter of 2018, subject to customary closing conditions, including receipt of required regulatory approvals and the tender of a majority of the shares outstanding of Armo's common stock. Shortly after the closing of the tender offer, Lilly said it will acquire any shares of Armo that are not tendered through a second-step merger at the tender offer price.

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