USA — Eli Lilly, a pharmaceutical giant has taken a daring step in the mergers and acquisitions (M&A) market by announcing its plan to acquire biotech company DICE Therapeutics, headquartered in South San Francisco, for US$2.4 billion in cash.

This strategic move by Lilly represents a significant wager on the promising oral IL-17 inhibitors in DICE’s pipeline.

After discontinuing its own early-stage study last year, Lilly is reentering the oral IL-17 market. The news has propelled DICE’s stock and is expected to have a substantial impact on both companies and the broader pharmaceutical sector.

DICE Therapeutics, an emerging biotech company, focuses heavily on developing small-molecule inhibitors for autoimmune and inflammatory diseases.

The company is currently conducting Phase II clinical trials for its primary candidate, DC-806, which targets psoriasis and related disorders.

Additionally, DICE is developing DC-853, a drug candidate for similar conditions that may exhibit greater potency and metabolic stability than DC-806.

DC-853 is currently in Phase I studies. DICE is also involved in various studies related to fibrosis and inflammatory bowel disease, which are still in the discovery stage.

Notably, the company is engaged in the development of an oral PD-L1 inhibitor for immuno-oncology, highlighting its commitment to cutting-edge research and development.

Eli Lilly’s acquisition of DICE will provide the resources, global reach, and scientific expertise needed to expedite the development of its pipeline and introduce innovative medicines.

Injectable antibodies targeting IL-17 have made a significant impact in autoimmune diseases, most notably Novartis’ Cosentyx. Lilly already markets an IL-17A inhibitor for psoriasis called Taltz.

Furthermore, there is the anti-IL-23p19 antibody mirikizumab, which has reached the Japanese market and aims to secure approvals for ulcerative colitis in Europe and other international markets this year.

Lilly’s strategic move to acquire DICE Therapeutics reflects the company’s evolving business development and M&A strategy.

CEO David Ricks has expressed concerns about the current regulatory framework for small molecules.

Unlike biologics, Medicare can negotiate pricing for small molecules after nine years under the Inflation Reduction Act, which spans 13 years for biologics.

As a result, Lilly and other pharmaceutical companies have prioritized investments in big molecule-based medicines.

By acquiring DICE and its portfolio of small molecule inhibitors, Lilly takes a calculated risk to leverage DICE’s expertise in this field while mitigating potential hazards posed by the changing regulatory landscape.

The agreement showcases Lilly’s commitment to expanding its market share in autoimmune and inflammatory diseases, particularly in the realm of oral medications.

It also underscores the company’s eagerness to invest in groundbreaking scientific research that aligns with its strategic objectives.

The market has responded positively to Eli Lilly’s acquisition of DICE Therapeutics, with DICE’s stock surging approximately 38% in premarket trade.

The deal, expected to be finalized in the third quarter, entails Lilly paying US$48.00 per share of DICE stock, representing a 40% premium. This substantial investment demonstrates Lilly’s confidence in DICE’s pipeline and future potential.

With this acquisition, Lilly expands its portfolio of autoimmune and inflammatory disease products, complementing its existing lineup, which already includes the injectable Taltz.

Taltz and DICE’s DC-806 have been compared for their ability to lower plasma IL-19 levels, highlighting the potential synergy and market opportunity that Lilly anticipates with this acquisition.

Furthermore, analysts suggest that the acquisition is unlikely to encounter significant regulatory hurdles, as the Federal Trade Commission is not expected to raise any major concerns.

This optimistic outlook paves the way for smooth integration between the two companies, enabling them to leverage their combined resources and scientific expertise.

This deal further exemplifies the resurgence of high-value M&A activities in the pharmaceutical industry this year.

It comes on the heels of Novartis’ US$3.4 billion upfront payment for kidney-disease-focused Chinook Therapeutics and Astellas’ US$5.9 billion acquisition of eye disease-focused Iveric Bio.

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