Lilly agrees to acquire Morphic Holding for about $3.2 billion

Eli Lilly has completed its acquisition of Morphic Holding, Inc., a biopharmaceutical company working on oral therapies for inflammatory bowel disease (IBD). Lilly first announced the deal on July 8, 2024, and the acquisition officially closed on August 16, 2024 ^[2]. The deal is not related to Lilly's diabetes and obesity drugs like Mounjaro or Zepbound, but it shows how Lilly is spending money it has earned from those products to expand into other disease areas.

Under the terms of the agreement, Lilly paid $57 per share in cash for Morphic, adding up to about $3.2 billion in total ^[1]. That price was about 79% higher than Morphic's closing stock price on July 5, 2024, the day before the deal was announced, and about 87.2% higher than Morphic's average share price over the prior 30 trading days ^[1]. Such a large premium is often a sign that the buyer sees strong long-term value in the target company's science.

The main asset Lilly gained is Morphic's lead drug candidate, called MORF-057, a selective oral small molecule that blocks a protein called α4β7 integrin ^[1]. This integrin plays a role in the inflammation that drives ulcerative colitis and Crohn's disease, two forms of IBD. MORF-057 is currently being tested in two Phase 2 studies for ulcerative colitis and one Phase 2 study for Crohn's disease ^[1]. Morphic also has other, earlier-stage drug candidates aimed at autoimmune diseases, pulmonary hypertensive diseases, fibrosis, and cancer, developed with a technology platform in partnership with Schrödinger ^[1].

The tender offer that finalized the deal drew strong participation from Morphic shareholders. According to Lilly, about 92.8% of Morphic's outstanding shares, or 46,731,511 shares, were tendered by the offer's expiration on August 15, 2024 ^[2]. After the tender offer closed, Lilly completed the purchase of the remaining shares through a merger, and Morphic's stock was removed from the Nasdaq exchange ^[2].

Why it matters for patients

For people with ulcerative colitis or Crohn's disease, this deal could eventually mean more treatment choices, though not right away. MORF-057 is still in mid-stage clinical trials, meaning it has not been proven safe and effective enough for approval by regulators, and it is not available to patients yet ^[1]. Daniel Skovronsky, Lilly's chief scientific officer, said an oral pill for IBD