Eli Lilly announced the acquisition of Morphic Holding, a biopharma company developing oral integrin therapies for treatment of chronic diseases, for $3.2 billion on Monday morning. 

Morphic’s main program is a selective oral small molecule inhibitor of α4β7 integrin, MORF- 057, to treat inflammatory bowel disease (IBD). 

The Massachusetts-based company is currently in the process of evaluating two Phase 2 studies utilizing this molecule to combat ulcerative colitis and Crohn’s disease. 

Morphic is also developing a preclinical pipeline of other molecules for the treatment of autoimmune diseases, pulmonary hyptertensive diseases, fibrotic diseases and cancer. 

Lilly commenced with a tender offer to buy all outstanding shares of Morphic for $57 per share, a 79% premium to the stock’s last closing price on Friday evening.

The deal has been approved by the board of directors of both companies and after the closing of the tender offer, Lilly will acquire any other shares through a second step merger. Morphic’s board of directors urged stockholders to tender their shares in the tender offer. 

The transaction is expected to close in the third quarter of 2024, is not subject to any financing conditions and will be reflected in Lilly’s upcoming financial results and financial guidance.

“Oral therapies could open up new possibilities for earlier intervention in diseases like ulcerative colitis, and also provide the potential for combination therapy to help patients with more severe disease,” said Daniel Skovronsky, MD, PhD, chief scientific officer of Lilly, in a statement. “We are eager to welcome Morphic colleagues to Lilly as this strategic transaction reinforces our commitment to developing new therapies in the field of gastroenterology, where Lilly has made significant investments to deliver first-in-class molecules for the benefit of patients.”

The Morphic acquisition was announced less than a week after the Food and Drug Administration approved Eli Lilly’s Alzheimer’s drug Kisunla, formerly known by its drug candidate name donanemab.

Lilly has sought to establish inroads in this therapeutic area in recent years, despite fits and starts associated with late-stage asset mirikizumab, an IL-23 inhibitor.

In April 2023, the FDA halted mirikizumab, citing manufacturing concerns. However, in October, Lilly announced the treatment met the co-primary and all major secondary endpoints versus placebo in a Phase 3 study involving adults with moderately-to-severely active Crohn’s disease. 

Additionally, just over a year ago, Lilly reached a definitive agreement to purchase Dice Therapeutics for $2.4 billion. 

One of the latter organization’s most promising assets is DC-806, an oral antagonist of interleukin-17 (IL-17), a pro-inflammatory signaling molecule which is a validated drug target implicated in a variety of immunology indications. 

Lilly is also the latest drugmaker to make a splashy acquisition in the increasingly competitive IBD treatment space.

In October, Roche acquired RVT-3101, a promising IBD drug, through its acquisition of Roivant’s Televant Holdings. 

Wall Street’s response to the acquisition has been overwhelmingly positive, as Morphic stock skyrocketed 75% following the announcement. 

Morphic CEO Praveen Tipirneni, MD said in a press release that Lilly’s scale offers the ability for MORF-057 to reach its fullest potential as an IBD treatment.