Acquisition to expand Lilly's immunology
pipeline with oral integrin therapies
INDIANAPOLIS and WALTHAM, Mass., July 8, 2024
/PRNewswire/ -- Eli Lilly and Company (NYSE: LLY) and Morphic
Holding, Inc. (NASDAQ: MORF) today announced a definitive agreement
for Lilly to acquire Morphic, a biopharmaceutical company
developing oral integrin therapies for treatment of serious chronic
diseases.
Morphic's lead program is a selective oral small molecule
inhibitor of α4β7 integrin for the treatment of inflammatory bowel
disease (IBD) that has the potential to improve outcomes and expand
treatment options for patients. This molecule (known as MORF-057)
is being evaluated in two Phase 2 studies in ulcerative colitis and
one Phase 2 study in Crohn's disease. Additionally, Morphic is
developing a preclinical pipeline of other molecules for the
treatment of autoimmune diseases, pulmonary hypertensive diseases,
fibrotic diseases and cancer.
"Oral therapies could open up new possibilities for earlier
intervention in diseases like ulcerative colitis, and also provide
the potential for combination therapy to help patients with more
severe disease," said Daniel
Skovronsky, M.D., Ph.D., chief scientific officer of Lilly
and president, Lilly Research Laboratories, president, Lilly
Immunology. "We are eager to welcome Morphic colleagues to Lilly as
this strategic transaction reinforces our commitment to developing
new therapies in the field of gastroenterology, where Lilly has
made significant investments to deliver first-in-class molecules
for the benefit of patients."
"Morphic has always believed that the immense potential of
MORF-057 to benefit patients suffering from IBD could be optimized
by the ideal strategic partner. Lilly brings unparalleled resources
and commitment to the inflammation and immunology field," commented
Praveen Tipirneni, M.D., CEO of
Morphic Therapeutic. "We built the Morphic Integrin Technology
platform to realize the vast opportunity of integrin therapeutics.
MORF-057 is a tremendous example of those efforts, an oral small
molecule α4β7 inhibitor with the potential to be well tolerated and
efficacious, attributes that could unlock new possibilities in IBD
treatment. My deepest thanks go to the entire Morphic Team for
their expertise, creativity and tenacity. We are also grateful to
the investigators and patients who have contributed to the success
of MORF-057 thus far, and we eagerly anticipate the path forward
for MORF-057 and other integrin medicines under Lilly's
stewardship."
Terms of the Agreement
Lilly will commence a tender
offer to acquire all outstanding shares of Morphic for a
purchase price of $57 per share in cash (an aggregate of
approximately $3.2 billion) payable at closing. The
transaction has been approved by the boards of directors of both
companies.
The transaction is not subject to any financing condition and is
expected to close in the third quarter of 2024, subject to
customary closing conditions, including the tender of a majority of
the outstanding shares of Morphic's common stock. Following the
successful closing of the tender offer, Lilly will
acquire any shares of Morphic that are not tendered in the tender
offer through a second-step merger at the same consideration as
paid in the tender offer.
The purchase price payable at closing represents a premium of
approximately 79.0% to the closing stock price on July 5, 2024, and 87.2% to the 30-day
volume-weighted average trading price of Morphic's common stock
ended on July 5, 2024, the last trading day before the
announcement of the transaction. Morphic's board of directors
recommends that Morphic's stockholders tender their shares in the
tender offer.
Lilly will determine the accounting treatment of this
transaction as a business combination or an asset acquisition,
including any related acquired in-process research and development
charges, according to Generally Accepted Accounting Principles
(GAAP) upon closing. This transaction will thereafter be reflected
in Lilly's financial results and financial guidance.
For Lilly, Citi is acting as exclusive financial
advisor and Kirkland & Ellis LLP is acting as legal
counsel. For Morphic, Centerview Partners LLC is acting as
exclusive financial advisor. Evercore Group L.L.C. also provided
advice to Morphic. Fenwick & West LLP is acting as legal
counsel.
About Morphic
Morphic is a biopharmaceutical company
developing a portfolio of oral integrin therapies for the treatment
of serious chronic diseases, including autoimmune, cardiovascular,
and metabolic diseases, fibrosis, and cancer. Morphic is also
advancing its pipeline and discovery activities in collaboration
with Schrödinger using its proprietary MInT technology platform
which leverages Morphic's unique understanding of integrin
structure and biology. For more information, visit
www.morphictx.com.
About Lilly
Lilly is a medicine company turning
science into healing to make life better for people around the
world. We've been pioneering life-changing discoveries for nearly
150 years, and today our medicines help more than 51 million people
across the globe. Harnessing the power of biotechnology, chemistry
and genetic medicine, our scientists are urgently advancing new
discoveries to solve some of the world's most significant health
challenges: redefining diabetes care; treating obesity and
curtailing its most devastating long-term effects; advancing the
fight against Alzheimer's disease; providing solutions to some of
the most debilitating immune system disorders; and transforming the
most difficult-to-treat cancers into manageable diseases. With each
step toward a healthier world, we're motivated by one thing: making
life better for millions more people. That includes delivering
innovative clinical trials that reflect the diversity of our world
and working to ensure our medicines are accessible and affordable.
To learn more, visit Lilly.com and Lilly.com/news, or follow
us on Facebook, Instagram and LinkedIn. C-LLY
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking
statements regarding Lilly's proposed acquisition
of Morphic, including regarding prospective benefits of the
proposed acquisition, regarding the anticipated occurrence, manner
and timing of the proposed tender offer and the closing of the
proposed acquisition, regarding Morphic's product candidates and
ongoing clinical and preclinical development and its MInT
technology platform, and regarding the accounting treatment of
the potential acquisition under GAAP and its potential impact on
Lilly's financial results and financial guidance. All statements
other than statements of historical fact are statements that could
be deemed forward-looking statements. Forward-looking
statements reflect current beliefs and expectations;
however, these statements involve inherent risks and
uncertainties, including with respect to consummating the
proposed acquisition and any competing offers or acquisition
proposals for Morphic, drug research, development and
commercialization, Lilly's evaluation of the accounting
treatment of the potential acquisition and its potential impact on
its financial results and financial guidance, uncertainties as to
how many of Morphic's stockholders will tender their stock in the
tender offer, the effects of the proposed acquisition (or the
announcement thereof) on Morphic's stock price, relationships with
key third parties or governmental entities, transaction costs,
risks that the proposed acquisition disrupts current plans and
operations or adversely affects employee retention, potentially
diverting management's attention from Morphic's ongoing business
operations, changes in Morphic's business during the period between
announcement and closing of the proposed acquisition, and any legal
proceedings that may be instituted related to the proposed
acquisition. Actual results could differ materially due to various
factors, risks and uncertainties. Among other things, there
can be no guarantee that the proposed acquisition will be completed
in the anticipated timeframe or at all, that the conditions
required to complete the proposed acquisition will be met, that any
event, change or other circumstance that could give rise to the
termination of the definitive agreement for the proposed
acquisition will not occur, that Lilly will realize the
expected benefits of the proposed acquisition, that product
candidates will be approved on anticipated timelines or at all,
that any products, if approved, will be commercially successful,
that Lilly's financial results will be consistent with its
expected 2024 guidance or that Lilly can reliably predict
the impact of the proposed acquisition on its financial results or
financial guidance. For further discussion of these and other
risks and uncertainties, see Lilly's and Morphic's most recent
Form 10-K and Form 10-Q filings with the United States
Securities and Exchange Commission (the "SEC"). Except as
required by law, neither Lilly nor Morphic undertakes any duty
to update forward-looking statements to reflect events after the
date of this press release.
Additional Information about the Acquisition and Where to
Find It
The tender offer for all of the outstanding
shares of Morphic described in this communication has not yet
commenced. This communication is for informational purposes only
and is neither an offer to purchase nor a solicitation of an offer
to sell any securities, nor is it a substitute for the tender offer
materials that Lilly and its acquisition subsidiary will
file with the SEC upon commencement of the tender offer.
A solicitation and offer to buy outstanding shares of Morphic will
only be made pursuant to the tender offer materials that Lilly and
its acquisition subsidiary intend to file with the SEC. At the time
the tender offer is commenced, Lilly and its acquisition
subsidiary will file tender offer materials on Schedule TO, and
Morphic will file a Solicitation/Recommendation Statement on
Schedule 14D-9 with the SEC with respect to the tender
offer. THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE,
A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER
DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION AND
THE PARTIES THERETO. INVESTORS AND STOCKHOLDERS OF MORPHIC ARE
URGED TO READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE
(AND EACH AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME)
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT INVESTORS AND
STOCKHOLDERS OF MORPHIC SHOULD CONSIDER BEFORE MAKING ANY DECISION
REGARDING TENDERING THEIR SHARES OF COMMON STOCK IN THE TENDER
OFFER. The tender offer materials (including the Offer to Purchase
and the related Letter of Transmittal), as well as the
Solicitation/Recommendation Statement, will be made available to
all investors and stockholders of Morphic at no expense to them at
Lilly's website at investor.lilly.com and (once they become
available) will be mailed to the stockholders of Morphic free of
charge. Copies of the documents filed with the
SEC by Morphic will be available free of charge on Morphic's
website, investor.morphictx.com, or by contacting Morphic's
investor relations department at chris.erdman@morphictx.com. The
information contained in, or that can be accessed through,
Morphic's and Lilly's websites is not a part of, or incorporated by
reference herein. The tender offer materials (including the Offer
to Purchase and the related Letter of Transmittal), as well as the
Solicitation/Recommendation Statement, will also be made available
for free on the SEC's website
at www.sec.gov. In addition to the Offer to Purchase, the
related Letter of Transmittal and certain other tender offer
documents, as well as the Solicitation/Recommendation
Statement, Lilly and Morphic file annual, quarterly, and
current reports, proxy statements and other information with the
SEC. You may read any reports, statements or other information
filed by Lilly and Morphic with the SEC for free on
the SEC's website at www.sec.gov.
Refer
to:
|
Jordan Bishop;
jordan.bishop@lilly.com; 317-473-5712 (Lilly Media)
|
|
Joe
Fletcher; jfletcher@lilly.com; 317-296-2884 (Lilly
Investors)
|
|
Chris Erdman;
chris.erdman@morphictx.com; 617-686-1718 (Morphic)
|
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SOURCE Eli Lilly and Company