Eli Lilly's $3.2B Morphic Deal Is 'Crucial,' Has 'Strategic Merit' Despite Investor Attention On Obesity: Analyst

Eli Lilly And Co LLY agreed to acquire Morphic Holding Inc MORF for $57 per share in cash, an aggregate of approximately $3.2 billion.

Lead asset MORF-057 is a small-molecule inhibitor that is currently in Phase 2b trial for ulcerative colitis, with a readout expected in the first half of 2025. It recently initiated a Phase 2 study in Crohn’s disease.

Also Read: Eli Lilly’s Alzheimer’s Therapy’s Broad Label Reflects Regulatory Confidence in Anti-Amyloid Antibodies: Analyst.

Goldman Sachs writes that Takeda Pharmaceutical Company Ltd’s TAK Entyvio generated $5.3 billion sales fiscal year 2023 in ulcerative colitis and Crohn’s disease.

The analyst notes the proposed deal has strategic merit and would present a potentially helpful step toward strengthening the company’s pipeline portfolio in Immunology.

Although investors are primarily focused on the obesity franchise’s performance and outlook, deals like these are crucial for strengthening the company’s diverse therapeutic areas, such as Immunology.

Despite receiving less attention from investors, Immunology remains an important development area for the company.

Last year, Eli Lilly acquired DICE Therapeutics, a biopharmaceutical company that leverages its proprietary DELSCAPE technology platform to develop oral therapeutic candidates for immunology indications for $48 per share.

Goldman Sachs reiterates the Neutral rating with a price target of $793.

Price Action: LLY shares are up 0.72% at $924.64 at last check Tuesday.

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