Morphic (NASDAQ: MORF) stock surged during intraday trading Monday after Eli Lilly revealed plans to acquire a biopharmaceutical firm at a significant premium.
Eli Lilly (NYSE: LLY) has announced a definitive agreement to acquire Morphic (MORF) for $3.2 billion in cash, valuing Morphic shares at $57 each—a significant 79% premium over its closing price on Friday. This strategic move will bolster Eli Lilly’s portfolio in inflammatory bowel disease (IBD) treatments and enhance its position in the lucrative multi-billion dollar market.
The acquisition includes Morphic’s experimental oral IBD treatment, offering patients a more convenient dosing option compared to existing injectable therapies, including Eli Lilly’s recently approved IBD drug, Omvoh.
The IBD market, which focuses on treatments for chronic gastrointestinal tract inflammation caused by abnormal immune system reactions, is fiercely competitive. Eli Lilly and competitors such as Abbvie Inc., Pfizer, and Johnson & Johnson are actively pursuing dominance in this market segment.
Eli Lilly views Omvoh, along with its blockbuster weight loss treatment Zepbound and diabetes drug Mounjaro, as pivotal to its future growth. Morphic’s lead candidate, MORF-057, is undergoing mid-stage clinical trials for ulcerative colitis and Crohn’s disease, underscoring its potential to complement Lilly’s existing pipeline.
Beyond IBD, Morphic is advancing other promising drug candidates in autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases, and cancer, expanding Lilly’s prospects in critical therapeutic areas.
The acquisition will close in the third quarter of 2024.
BMO analyst Evan Seigerman noted that the deal aligns with Lilly’s plan to diversify beyond obesity and fits within its recent pattern of smaller acquisitions, often referred to as “bolt-on” deals, typically below the $10 billion range.
Last year, Eli Lilly completed acquisitions such as Dice Therapeutics for $2.4 billion and Point Biopharma Global for $1.4 billion.
Morphic (NASDAQ: MORF) Stock Reaction
MORF stock soared 75.06% on Monday, closing at $55.74, marking a 63.60% increase for the week. The trading volume was 53,239,378 shares, significantly higher than the average daily volume of 1.37 million.
