Image source: Prevail Therapeutics
(Reuters) -Drugmaker Eli Lilly and Co said on Tuesday it would spend about $1 billion to buy Prevail Therapeutics Inc to strengthen its presence in the lucrative field of gene therapy that is used to develop treatments for neurodegenerative diseases such as Parkinson’s.
Lilly also forecast 2021 revenue above analysts’ average estimates, helped by about $1 billion to $2 billion in sales of its COVID-19 treatments.
Gene therapy has emerged as one of the hottest areas of drug research, with several large drugmakers drawn into the field as such treatments are usually expensive.
Novartis’ Zolgensma, its gene-therapy for a rare muscular disorder, is the world’s most-expensive one-time treatment with a price of $2.1 million per patient.
Lilly’s deal will enable it to create a gene therapy program that will be anchored by Prevail’s experimental treatments, such as its experimental lead therapy for patients with Parkinson’s disease.
The Prevail deal checks the boxes for what Lilly was looking for, and we believe makes strategic sense at a reasonable price, Mizuho analysts said in a note.
Prevail shareholders will get $22.50 per share, a premium of 80% to the stock’s Monday close.
The deal includes a “contingent value right” worth $4 per share in cash, payable upon the first regulatory approval of a product from Prevail’s pipeline.
Prevail’s shares soared 83.2% on Tuesday, while Lilly’s stock rose 3.8%.
Several of Prevail’s therapies have been granted “fast track” and “orphan drug” tags by the U.S. Food and Drug Administration and the European Commission.
The company’s preclinical pipeline includes potential gene therapies for Alzheimer’s disease and amyotrophic lateral sclerosis, or Lou Gehrig’s disease, the companies said.
For 2021, Lilly expects revenue to be between $26.5 billion and $28 billion. Analysts on average were expecting 2021 sales of $26.47 billion, according to IBES data from Refinitiv.
Reporting by Manas Mishra, Vishwadha Chander and Dania Nadeem in Bengaluru; Editing by Amy Caren Daniel and Sriraj Kalluvila.
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Source: Reuters
