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.

The Loxo Oncology headquarters in Stamford, Connecticut, US. February 20, 2018.
The Loxo Oncology headquarters in Stamford, Connecticut, US. February 20, 2018. (Reuters)

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.

Source: TRTWorld and agencies