Medicine company Eli Lilly and Company (NYSE: LLY) and biopharmaceutical company Morphic Holding Inc (NASDAQ: MORF) on Monday announced a definitive agreement for Lilly to acquire Morphic, a biopharmaceutical firm developing oral integrin therapies for serious chronic diseases.

Morphic's lead program, MORF-057, a selective oral small molecule inhibitor of α4β7 integrin, targets inflammatory bowel disease (IBD) and is undergoing Phase 2 studies in ulcerative colitis and Crohn's disease. Morphic also has a preclinical pipeline for autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases and cancer.

Lilly will launch a tender offer to purchase all Morphic shares at USD57 per share in cash, totaling approximately USD3.2bn. This represents a 79.0% premium to the closing stock price on 5 July 2024. The transaction, approved by both companies' boards, is expected to close in Q3 2024, subject to customary conditions.

Lilly's financial results will reflect the acquisition as a business combination or asset acquisition per GAAP. Citi and Kirkland & Ellis LLP are advising Lilly, while Centerview Partners LLC, Evercore Group L.L.C. and Fenwick & West LLP are advising Morphic.

With nearly 150-year history of pioneering life-changing medicines, Lilly aims to improve patient outcomes and expand treatment options for IBD with this acquisition.