- Eli Lilly announced Thursday plans to acquire one of its partners, the cell therapy developer Sigilon Therapeutics, for up to $310 million.
- The companies first teamed up in 2018 to create stem cell-derived treatments for Type 1 diabetes. That deal gave Lilly an exclusive worldwide license to Sigilon’s technology in exchange for $63 million upfront and an undisclosed equity investment in its new partner. Sigilon was also eligible for as much as $410 million more, provided its medicines achieve certain development and commercialization goals.
- Lilly is now offering to buy all outstanding shares of Sigilon that it doesn’t already own for $14.92 apiece in cash, for an aggregate value of about $35 million. Sigilon shareholders would also received a “contingent value right,” or CVR, that could be worth up to $111.64 per share if the company’s programs hit specific research and regulatory milestones.
Cell therapies have proven to be potent weapons against certain cancers. But research suggests they may also be viable treatment options for other, more common diseases like Type 1 diabetes, which has stirred additional interest from large pharmaceutical firms.
Almost a decade ago, Johnson & Johnson inked a small deal with ViaCyte, a San Diego-based biotechnology company that was trying to develop a cell therapy for Type 1 diabetes. J&J had already been doing its own research in this area, and two years into the ViaCyte deal, agreed to sell its asset to its new partner.
By the end of 2018, ViaCyte had entered into strategic collaboration with CRISPR Therapeutics to advance gene-edited stem cell therapies for diabetes. Vertex Pharmaceuticals would join the fray the following year, spending $950 million to acquire Semma Therapeutics and its experimental drug-device combination, which is designed to deliver large amounts of functional pancreatic cells without triggering harmful immune responses.
Vertex would go on to buy ViaCyte as well, through a $320 million acquisition announced last year. Since then, both AstraZeneca and Novo Nordisk have inked deals with startups aiming to create cellular medicines for diabetes.
Recent milestones may gin up further interest in this area of research. Earlier this month, Vertex reported results from a small study testing Semma’s therapy, now known as VX-880, in Type 1 diabetes patients who take large amounts of insulin each day and have a history of severe low blood sugar events. The study showed that the two patients who had been followed for at least a year after treatment no longer required insulin shots.
Liisa Bayko, an analyst at the investment firm Evercore ISI, wrote in a note to clients Thursday that insulin independence is the “holy grail” of Type 1 diabetes treatment. Bayko added that “off-the-shelf” cell therapy could be “revolutionary” for these patients, with Vertex’s program currently the lead position.
Elsewhere, the Food and Drug Administration just this week approved the first cell therapy for Type 1 diabetes. It uses pancreas cells from a donor, and is meant for adult patients who, despite intensive diabetes management and education, aren’t able to get their blood sugar to a healthy level.
For Lilly, the Sigilon acquisition could be seen as a relatively inexpensive way to invest in the space further. Much of the deal’s value is tied to the CVR, which would be paid in a piecemeal fashion.
Sigilon investors would get an additional $4.06 per share in cash if or when the first human trial of a specified product from the company begins dosing patients. They could receive $26.39 more per share upon dosing in the first clinical trial that could support an approval application. Another $81.19 per share would be payable should that product be approved.
The acquisition is the second Lilly has announced this month. Last week, the company agreed to purchase Dice Therapeutics, a developer of inflammatory disease drugs, for $2.4 billion.