Golden alliance on Wall Street: two pharmaceutical companies close a multimillion-dollar agreement and shares soar 75%

Golden alliance on Wall Street: two pharmaceutical companies close a multimillion-dollar agreement and shares soar 75%

One of the companies had posted a 10% year-to-date increase before the deal was announced. This acquisition marks a turnaround after disappointing clinical trial results sparked a sell-off last year in September.

Reuters

Morphic Holding is experiencing a rise in its shares of more than 75% in early trading on Monday, after the biotech company agreed to be acquired by pharmaceutical company Eli Lilly for US$3.2 billion.

Eli Lilly & Co announced on Monday that it has acquired Morphic Holding Inc., a US company specialising in drugs for intestinal diseases, investing part of the profits obtained from the success of Zepbound, a treatment for obesity, in its portfolio of products in the experimental phase.

Shares of Morphic Holding Inc. rose 75.2 percent after the announcement. Eli Lilly shares rose 0.5 percent. Lilly will pay $57 a share in cash for Waltham, Massachusetts-based Morphic, a 79 percent increase over Friday’s closing price. Morphic’s board has recommended shareholders accept the offer.

What’s behind the purchase

Immunology is a key area for Lilly, and CEO Dave Ricks has expressed a commitment to making more early-stage acquisitions to bring in new technologies. For Morphic shareholders, this acquisition marks a shift after disappointing clinical trial results sparked a sell-off last September.

Before the US market opened, Morphic shares were up 76%. The company had already posted a 10% rise so far this year before the deal was announced.

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Morphic is developing a selective oral small molecule inhibitor to treat inflammatory bowel diseases.

Morphic is developing a selective oral small molecule inhibitor to treat inflammatory bowel diseases.

Morphic is developing a selective oral small-molecule inhibitor to treat inflammatory bowel diseases. Its most advanced candidate compound is being evaluated in three mid-phase clinical trials, two for ulcerative colitis and one for Crohn’s disease. Lilly is already active in this field, having obtained FDA approval last year for its Omvoh injection for ulcerative colitis.

According to Daniel Skovronsky, Lilly’s chief scientific officer, drugs like the one developed by Morphic could allow doctors to treat patients with diseases like ulcerative colitis more effectively, possibly offering combination treatment options for more severely affected patients.

Source: Ambito

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