The pharmaceutical company says it is buying Loxo Oncology for $235 a share in cash, a deal that expands the company’s cancer-treatment portfolio.
Eli Lilly is spending about $8 billion in cash to buy Loxo Oncology, as the drugmaker bulks up on cancer treatments that target certain gene abnormalities.
Loxo Oncology could launch a drug next year to target an abnormality that occurs in several tumour types, including some lung and thyroid cancers, Lilly said in a prepared statement announcing the deal on Monday.
Lilly, known for insulins like Humalog, has emphasised oncology growth over the past several years.
The Indiana-based drugmaker's oncology portfolio includes its top-selling lung cancer drug Alimta, Erbitux, a treatment for certain types of colorectal cancers and gastric cancer medicine Cyramza.
Alimta brought in $520.5 million in the latest reported quarter.
Loxo’s tumour-treating drug Vitrakvi, priced at $32,800 per month, could eventually generate over $750 million in sales along with another similar drug, LOXO-195, according to brokerage Piper Jaffray & Co.
Eli Lilly and Co will pay $235 for each share of Stamford, Connecticut-based Loxo.
That's a 68 percent premium to the company's Friday closing price of $139.87.
The deal is expected to close by the end of the first quarter.
Lilly's announcement was the second big pharmaceutical acquisition announced in the new year. It follows a $74-billion acquisition of Celgene by Bristol-Myers Squibb announced last week.
Shares of Eli Lilly fell nearly three percent to $111.39 in Monday premarket trading.
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