Eli Lilly (LLY) is strengthening its presence in genetic medicine with a deal worth $261.7 million to acquire Adverum Biotechnologies (ADVM), a clinical-stage biotech focused on gene therapies for eye diseases. The agreement includes an upfront payment of $3.56 per share and potential milestone-based payouts that could bring the total to $12.47 per share.
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Following the news, shares of Adverum surged over 17%, while Lilly stock rose about 2%.
Here’s What Lilly Gains from This Deal
The key part of the acquisition is Adverum’s lead candidate Ixo-vec, a Phase 3 gene therapy designed to treat wet age-related macular degeneration (wAMD) with a single intravitreal injection.
Unlike current treatments that need regular eye injections, Ixo-vec works by steadily releasing aflibercept, which could mean fewer treatments and better results for patients.
Currently, Ixo-vec is in a late-stage trial and has received several designations from U.S. regulators that could speed up the drug’s review.
This supports Lilly’s plan to grow its genetic medicine business, especially in areas where patients have few treatment options.
Key Terms of the Deal
Under the agreement, Adverum’s shareholders will receive $3.56 per share in cash at closing, plus one contingent value right (CVR) per share. This CVR could pay up to $8.91, depending on two future milestones.
The first milestone pays $1.78 if Ixo-vec gets U.S. approval within seven years of the deal closing. The second milestone will pay $7.13 if annual global sales of Ixo-vec reach $1 billion within ten years.
If the deal goes through, Adverum will become Lilly’s subsidiary, and its stock will be delisted from Nasdaq. To help Adverum operate until the deal closes, Lilly will provide up to $65 million in loans.
Importantly, the merger agreement includes a $4 million breakup fee if Adverum backs out under certain conditions. Both companies can cancel the deal if it is not completed by January 22, 2026.
Is Eli Lilly a Buy, Sell, or Hold?
Turning to Wall Street, LLY stock has a Strong Buy consensus rating based on 18 Buy and four Hold ratings assigned in the last three months. At $909.44, the average Eli Lilly stock price target implies a 9.43% upside potential.
