How This Dermira Acquisition Will Round Out Eli Lilly

Health and Healthcare

Published: January 10, 2020 10:05 am

Last Updated: January 30, 2020 11:23 am

Dermira Inc. (NASDAQ: DERM) shares made a handy gain to close out the week after it was announced that Eli Lilly and Co. (NYSE: LLY) would be acquiring the firm. The transaction is expected to close by the end of the first quarter and is subject to customary closing conditions, regulatory approvals and the tender of a majority of the outstanding shares of Dermira’s common stock.

Under the terms of the deal, Dermira shareholders will receive $18.75 per share in cash for a total consideration for $1.1 billion. This is an all-cash transaction.

The purchase price represents a premium of roughly 86% to the 60-day volume-weighted average trading price of Dermira’s stock ending on January 9, 2020.

The acquisition will expand Lilly’s immunology pipeline with the addition of lebrikizumab, which is being evaluated in a Phase 3 clinical development program for the treatment of moderate-to-severe atopic dermatitis in adolescent and adult patients. Lebrikizumab was previously granted Fast Track designation from the U.S. Food and Drug Administration (FDA) in December 2019.

Also, this acquisition will expand Lilly’s portfolio of marketed dermatology medicines with the addition of Qbrexza (glycopyrronium) cloth, a medicated cloth approved by the FDA for the topical treatment of primary axillary hyperhidrosis (uncontrolled excessive underarm sweating).

Patrik Jonsson, Eli Lilly senior vice president and president of Lilly Bio-Medicines, commented:

People suffering from moderate-to-severe atopic dermatitis have significant unmet treatment needs, and we are excited about the potential that lebrikizumab has to help these patients. The acquisition of Dermira is consistent with Lilly’s strategy to augment our own internal research by acquiring clinical phase assets in our core therapeutic areas and leveraging our development expertise and commercial infrastructure to bring new medicines to patients. This acquisition provides an opportunity to add a promising Phase 3 immunology compound for atopic dermatitis, while also adding an approved dermatology treatment for primary axillary hyperhidrosis. We look forward to completing the acquisition and continuing Dermira’s excellent work.

Shares of Eli Lilly were last seen trading at $136.73, in a 52-week range of $101.36 to $137.61. The consensus price target is $133.08.