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Eli Lilly, the world’s largest pharmaceutical company by market capitalization, is in talks to acquire Scorpion Therapeutics, a biotechnology company specializing in cancer treatment, in a deal worth up to $2.5 billion, people close to the negotiations say. revealed.
Eli Lilly’s pursuit of privately held Scorpion is the latest example of a strategy to redistribute huge profits from blockbuster diabetes and obesity drugs Munjaro and Zepbound to diversify its pipeline. be.
As part of the proposed terms, Eli Lilly will pay Boston-based Scorpion about $1 billion upfront and upon the achievement of certain performance milestones, according to three people familiar with the details. The company plans to pay up to $1.5 billion at a later date.
A deal is likely to be reached in the coming days ahead of JPMorgan’s annual healthcare conference in San Francisco, the people added, but there is no guarantee. Eli Lilly is advised by JPMorgan.
Eli Lilly and JPMorgan declined to comment. Scorpion did not respond to requests for comment.
Scorpion’s lead drug inhibits protein mutations that are the main cause of breast, gynecological, and head and neck cancers, which affect up to 166,000 people in the United States each year. to
Existing drugs that target this protein are associated with a high degree of side effects, but Scorpion believes its drug will reduce them. The drug candidate is currently in phase 2 clinical trials.
Scorpion’s founders include Keith Flaherty, cancer expert and director of clinical research at Massachusetts General Hospital Cancer Center. Flaherty was a co-founder of Loxo Oncology, which was acquired by Eli Lilly in 2019 for $8 billion.
Loxo Oncology has become the centerpiece of Eli Lilly’s oncology strategy, but the pharmaceutical group has also made several bolt-on acquisitions recently.
In 2023, it paid $1.3 billion for radiopharmaceutical biotech Point Biopharma, and last year agreed to a partnership with cancer-focused biotechs Actis Oncology and Radionetics.
Advisers and competitors are closely watching how Eli Lilly uses the proceeds from its anti-obesity drug, and so far the company has largely opted for smaller deals. It also spent much of its cash flow expanding its manufacturing capacity for weight-loss drugs.
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Eli Lilly’s market capitalization was just over $750 billion as of early Friday afternoon in New York trading.
It’s expected to generate about $46 billion in revenue this year, with much of that coming from Mounjaro and Zepbound. Analysts predict that the total market for weight loss drugs could reach up to $130 billion in annual sales at its peak.
Eli Lilly Chief Executive Dave Ricks told the Financial Times in September: . . We can do more of that. ”
Scorpion has raised $420 million from investors including venture capital firm Lightspeed Venture Partners, Fidelity Management and Wellington Management, and was last valued at $800 million, according to data provider PitchBook. It was $45 million.
If the deal goes through, it would be the latest example of a small acquisition by a private biotech company. The FT reported this week that British drugmaker GSK is close to a deal worth up to $1 billion with cancer biotech IDRx.
