Eli Lilly expands pain pipeline with acquisition of SiteOne Therapeutics

Investing.com -- Eli Lilly and Company (NYSE:LLY) is expanding its neuroscience pipeline through the acquisition of SiteOne Therapeutics in a deal worth up to $1 billion, deepening its bet on non-opioid pain treatments. The centerpiece of the acquisition is STC-004, a Phase 2-ready Nav1.8 inhibitor that could offer significant relief to patients suffering from chronic pain without the risks associated with addictive medications.

The transaction follows growing investor momentum behind non-opioid alternatives as public and regulatory pressure continues to intensify around opioid misuse. Lilly said the acquisition aligns with its ambition to lead in next-generation pain therapeutics while bolstering its research focus in neurology.

"The global burden of chronic pain continues to increase, and an effective non-opioid treatment remains elusive," said Mark Mintun, Lilly’s Group Vice President of Neuroscience Research and Development. "Lilly is eager to continue the development of STC-004 with the outstanding SiteOne team as part of our efforts to advance novel, addiction-free pain therapies."

SiteOne, a privately held biotech, has spent years developing its proprietary platform around Nav1.8 channel inhibition, which plays a key role in pain signal transmission. The deal represents a strategic milestone for the company, which has yet to commercialize a product but has generated growing interest from pharmaceutical partners.

"At SiteOne, we’ve spent more than a decade advancing a vision to deliver safer, more effective, non-opioid therapies for patients suffering from pain and other sensory hyperexcitability disorders," said John Mulcahy, Ph.D., CEO and cofounder of SiteOne Therapeutics. "Lilly shares our deep commitment to scientific rigor, innovation, and patient-centered drug development."

Lilly will pay an upfront fee and additional milestone-based payments tied to regulatory and commercial achievements, bringing the total value of the transaction to a possible $1 billion. The company said the acquisition will be accounted for under generally accepted accounting principles (GAAP) and reflected in its future financial guidance.

Investment banks and legal teams are positioned behind both sides of the transaction, with J.P. Morgan Securities acting as exclusive financial advisor to Lilly and Jones Day serving as legal counsel. SiteOne was advised by Centerview Partners, while Skadden, Arps, Slate, Meagher & Flom LLP and Cooley LLP served as legal counsel.

Pending closing conditions, the acquisition marks Lilly’s continued strategic push to diversify beyond its dominant diabetes and oncology portfolio. As competition intensifies in central nervous system therapies, the move could position Lilly on the front edge of a potentially transformative class of pain treatments.

Lilly stock is up nearly 1% following the announcement.