Lilly to acquire SiteOne, enhancing non-opioid pain treatment options

INDIANAPOLIS - Eli Lilly and Company (NYSE:LLY), a global pharmaceutical leader with a market capitalization of $647 billion and an impressive 81.7% gross profit margin, has announced a definitive agreement to acquire SiteOne Therapeutics, Inc., a biotechnology firm specializing in the development of non-opioid pain treatments. This strategic move is aimed at bolstering Lilly’s portfolio in pain management therapies that do not carry the risk of addiction associated with opioids. According to InvestingPro data, Lilly maintains a strong financial health rating, supported by 36.4% revenue growth over the last twelve months.

The acquisition centers on SiteOne’s STC-004, a Phase 2 ready Nav1.8 inhibitor, which is being researched as a potential new treatment for chronic pain. Mark Mintun, Lilly’s group vice president of Neuroscience Research and Development, highlighted the growing global burden of chronic pain and the need for effective non-opioid treatments.

Under the terms of the agreement, Lilly will provide SiteOne shareholders with up to $1 billion in cash, inclusive of an upfront payment and additional payments contingent on the achievement of certain regulatory and commercial milestones. The company’s robust financial position, with a maintained dividend for 55 consecutive years and 15.4% dividend growth in the last year, provides strong backing for such strategic investments.

John Mulcahy, Ph.D., CEO and co-founder of SiteOne Therapeutics, expressed confidence that Lilly’s global capabilities and neuroscience leadership will expedite the development of STC-004 and maximize its potential to address pain treatment.

The completion of the transaction is subject to customary closing conditions. Following the deal’s closure, Lilly will determine the accounting treatment in accordance with Generally Accepted Accounting Principles (GAAP), and the acquisition will be reflected in Lilly’s financial results and guidance. With seven analysts recently revising earnings estimates upward and a consensus recommendation of 1.75 (Strong Buy), market experts maintain a positive outlook on Lilly’s growth trajectory. For deeper insights into Lilly’s financial health and growth prospects, access the comprehensive Pro Research Report available on InvestingPro, which offers detailed analysis of this prominent pharmaceutical player.

Lilly’s financial advisor for the transaction is J.P. Morgan Securities LLC, with Jones Day providing legal counsel. SiteOne is advised by Centerview Partners LLC, Skadden, Arps, Slate, Meagher & Flom LLP, and Cooley LLP on financial and legal matters, respectively.

The information about this acquisition is based on a press release statement from Eli Lilly and Company.

In other recent news, Eli Lilly and Company announced that the Australian Therapeutic Goods Administration has approved Kisunla for treating early Alzheimer’s disease in adults. This approval is based on clinical trials demonstrating Kisunla’s ability to slow cognitive decline. Eli Lilly has also expanded its partnership with Purdue University through a $250 million investment over eight years, focusing on drug discovery and workforce development. Morgan Stanley reaffirmed its Overweight rating on Eli Lilly stock, citing a new agreement with Cigna/Evernorth to cap patient copays for Zepbound and maintain open access through 2026. Bernstein analysts maintained their Outperform rating for Eli Lilly, noting the company’s growing market share in the GLP-1 sector. They highlighted a 61.8% year-over-year increase in GLP-1 prescriptions, with Eli Lilly’s products like Mounjaro and Zepbound leading the growth. President Trump’s recent Executive Order on drug pricing was also favorable towards Eli Lilly, recognizing the company’s contributions to U.S. manufacturing and the obesity market.

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