Eli Lilly to buy cancer specialist Point for $1.4bn

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Eli Lilly, the world’s largest drugmaker, plans to bolster its portfolio of cancer drugs by buying Point Biopharma for $1.4bn, paying a premium of almost 90 per cent to Monday’s closing price. 

The Indianapolis-based pharma group has become the second major drugmaker after Swiss company Novartis to invest in radioligand therapy, which involves molecules delivering radiation at close range to cancerous cells and is more targeted than radiotherapy.

Jacob Van Naarden, president of the company’s oncology division Loxo@Lilly, said the acquisition of Point would be the “beginning of our investment in developing multiple meaningful radioligand medicines for hard-to-treat cancers”.

“Over the past few years, we have seen how well-designed radiopharmaceuticals can demonstrate meaningful results for patients with cancer and rapidly integrate into standards of care, yet the field remains in the early days of the impact it may ultimately deliver,” he said. 

Shares in Lilly have surged almost 65 per cent in the past year to make it the largest drugmaker by market capitalisation, spurred by success with its new drugs for obesity and Alzheimer’s. 

On Monday, Lilly stock fell 2.4 per cent to $525.66. Shares in Point rose 85 per cent to $12.37. 

Lilly will pay $12.50 per share in cash, an 87 per cent premium to the closing price on October 2 and a 68 per cent premium to the 30-day volume-weighted average price. 

Shares in Point had fallen almost 68 per cent from their peak in February 2021, as investors cooled on early-stage biotech stocks, particularly those that, such as Point, went public during the coronavirus pandemic. 

Despite the significant drop in the biotech markets, most big pharma companies have stuck to larger late-stage deals, rather than hunting for bargains. 

Umer Raffat, an analyst at Evercore ISI, praised Lilly for picking assets carefully and “not dropping tens of billions on overpriced deals”. He said the Point acquisition was an example of “very smart M&A”. 

While Point has two drugs in late-stage trials, Raffat said they were licensed to Lantheus Medical Imaging, which is paying royalties of 15 per cent to 20 per cent to Point. He said the deal’s real value lies in the pipeline of drugs earlier in development, which are trying to improve on the market leaders by making them more lethal to cancer cells but safer to administer. 

Novartis chief executive Vas Narasimhan said in 2021 that he believed the radioligand market could be worth up to $10bn. Novartis has had two radioligand drugs approved, one for a type of prostate cancer, and another for treating tumours in the gut.