Eli Lilly and Co (NYSE:LLY)’s $2.4 billion acquisition of DICE Therapeutics “makes strategic sense,” bolstering the global pharmaceutical company’s presence in immunology, analysts at UBS said in a note on Wednesday.
UBS, which has a ‘Buy’ rating and a 12-month price target of $498 for Eli Lilly, noted that the acquisition provides two oral IL-17 inhibitors DC-806 and DC-853, as well as additional pipeline opportunities to the company’s profile.
At $47 per share, a 40% premium to DICE’s 30-day volume-weighted average price (VWAP), the analysts described the deal value as a “rounding error” versus the GLP-1 franchise cash flows.
“We expect there will be some discussion over how de-risked lead asset DC-806 is but we like this deal for LLY,” the analysts wrote.
DC-806 is currently in a Phase 2b trial with primary completion expected July 2024, while DC-853 is currently being evaluated in Phase 1 healthy volunteers with data expected in the second half of 2023, the analysts noted.
“Additionally, DICE planned to announce an oral novel scaffold development candidate (part of oral IL-17 franchise) and α4β7 integrin inhibitor in 2H23,” the analysts said. Other oral agents for fibrosis (αVβX inhibitor) as well as an oral PD-L1 are in discovery phase. The acquisition also brings DICE's DELSCAPE platform for small molecule oral immunology protein-protein-interface target discovery in-house.”
Eli Lilly’s US-listed shares were up 0.5% at $454.10 just before midday on Wednesday.
Contact the author at stephen.gunnion@proactiveinvestors.com