U.S. pharmaceutical giant Eli Lilly (LLY) is acquiring gene therapy developer Adverum Biotechnologies (ADVM) in a deal valued at $261.7 million.
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In a news release, Eli Lilly said that the purchase of Adverum will give it access to an experimental eye disease treatment and further strengthen its drug development pipeline. Specifically, the acquisition will give Eli Lilly access to Adverum’s drug candidate Ixo-vec as it looks to further expand into the eye care market and gene therapies.
Eli Lilly has offered to pay $3.56 for each share of Adverum, totaling about $74.7 million in cash.
Shareholders may also get up to $8.91 per share in milestone payments, contingent on U.S. approval of Ixo-vec within seven years and achieving more than $1 billion of annual sales within a decade.
Gene Therapies
The total potential payout to Adverum stockholders is $12.47 per share. Adverum shares closed at $4.18 on Oct. 23 of this year. They rose nearly 3% to $4.29 on news of the Eli Lilly acquisition. The deal provides a lifeline to Adverum, whose cash reserves are dwindling.
Ixo-vec is a gene therapy that’s being studied in a late-stage trial as a one-time eye injection for wet age-related macular degeneration, a leading cause of blindness in senior citizens. The Ixo-vec treatment market is estimated at about 1.5 million patients in the U.S., said Eli Lilly. Analysts at TD Cowen (TD) forecast global sales of Ixo-vec reaching $1.3 billion in 2033.
Eli Lilly said that it expects the Adverum acquisition to close in the fourth quarter of this year.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy rating among 22 Wall Street analysts. That rating is based on 18 Buy and four Hold recommendations issued in the last three months. The average LLY price target of $920.88 implies 10.61% upside from current levels.
