Eli Lilly and Company has finalised its acquisition of Morphic Holding, Inc. in a landmark $3.2 billion deal, aimed at enhancing treatment options for inflammatory bowel disease (IBD). This acquisition underscores Lilly’s strategic expansion into the gastroenterology sector. The transaction, valued at $57 per share, is a significant premium over Morphic’s recent stock prices, reflecting the high regard Lilly holds for Morphic’s innovative therapies.

Deal Overview and Strategic Significance

The acquisition was executed through a tender offer, which saw 46,731,511 Morphic shares tendered and accepted, representing approximately 92.8% of the company’s outstanding stock. This deal was first announced in July 2024 and represents a substantial commitment by Lilly to advance its capabilities in the treatment of chronic diseases. Following the acquisition, Morphic’s stock will be delisted from The Nasdaq Global Market, marking the end of its public trading.

Dr. Daniel Skovronsky, Chief Scientific Officer of Eli Lilly and President of Lilly Research Laboratories and Lilly Immunology, highlighted the strategic importance of this acquisition: “We are committed to exploring innovative approaches for immunologic diseases and believe Morphic’s pipeline holds promise in improving outcomes and expanding treatment options for people with devastating conditions like IBD.”

Integration with Lilly’s Existing Portfolio

This acquisition is set to complement Lilly’s existing gastroenterology portfolio, particularly its drug Omvoh, which is already approved for ulcerative colitis and under regulatory review for Crohn’s disease. The integration of Morphic’s assets is expected to boost Lilly’s research capabilities, enabling the exploration of new combination treatments. Lilly’s acquisition of Morphic aligns with its broader strategy to leverage cutting-edge science to address unmet medical needs.

Morphic’s Pipeline and Innovations

Morphic Holding is known for its pioneering work in developing oral integrin therapies. Its flagship product, MORF-057, is a selective oral small molecule inhibitor of α4β7 integrin. Currently in Phase 2 clinical trials, MORF-057 is being investigated for its efficacy in treating ulcerative colitis and Crohn’s disease. This molecule is part of a more extensive pipeline targeting various autoimmune diseases, fibrotic conditions, cancer, and pulmonary hypertension.

In addition to MORF-057, Morphic’s pipeline includes several other promising compounds that have the potential to address significant medical gaps. The acquisition provides Lilly with an opportunity to accelerate the development of these therapies, potentially leading to new treatment options for patients with complex conditions.

Financial and Advisory Details

The financial advisory for Eli Lilly was provided by Citi, with Kirkland & Ellis LLP serving as legal counsel. For Morphic, Centerview Partners LLC acted as the exclusive financial advisor, with additional advisory support from Evercore Group L.L.C. Legal counsel for Morphic was provided by Fenwick & West LLP. This team of advisors played a crucial role in facilitating the smooth execution of the acquisition.

Impact on IBD and Beyond

The acquisition of Morphic is poised to significantly impact the treatment landscape for IBD and other chronic diseases. By integrating Morphic’s advanced integrin technology with its own drug development capabilities, Lilly aims to strengthen its position as a leader in gastroenterology and improve the quality of life for patients with severe inflammatory conditions. This strategic move aligns with Lilly’s broader mission to advance medical science and deliver innovative treatments.

Future Prospects

Looking ahead, Lilly’s acquisition of Morphic is expected to yield substantial benefits, both in terms of financial performance and therapeutic advancements. The deal is anticipated to be immediately accretive to Lilly’s earnings per share, reflecting the value of Morphic’s technologies and the synergies achieved through this integration.

  Centerview Partners LLC, Citi, Daniel Skovronsky, Eli Lilly, Evercore Group L.L.C., Fenwick & West LLP, Gastroenterology, inflammatory bowel disease, Kirkland & Ellis LLP, Lilly, MORF-057, Morphic Holding, Omvoh