Dive Brief:

• Eli Lilly has reached a deal to acquire Emergence Therapeutics, a German biotechnology startup focused on antibody-drug conjugates, or ADCs, the company confirmed to BioPharma Dive on Thursday.

• In a short statement, European cancer drug developer and founding Emergence investor Heidelberg Pharma said Lilly is acquiring all of the startup’s shares. Deal terms weren’t disclosed, but Heidelberg will receive $7 million for its stake in the company. Lilly, in an email, declined to provide more details.

• Emergence’s lead candidate, called ETx-22, focuses on a target called Nectin-4, that’s overexpressed in most bladder cancers. The protein is the focus of other experimental drugs in clinical development, as well as Seagen’s marketed medicine Padcev.

Dive Insight:

Though Eli Lilly is best known for its diabetes treatments, it’s spent significant resources of late bulking up its cancer drug business, starting with its 2019 acquisition of Loxo Oncology.

That pursuit has included a focus on targeted cancer medicines, which are meant to hone in on tumors more specifically while sparing healthy tissue. And as of late, it’s begun to show renewed interest in ADCs, which link a targeting antibody to a tumor-killing toxin. Last year, it rekindled a relationship with ImmunoGen. Now it’s buying Emergence.

In an email, Lilly declined to specify what other ADCs the company is working on. A spokesperson said the company’s research involves “internal expertise and external relationships.”

Lilly isn’t alone, however. Drugmakers have invested heavily in ADC research in recent years, leading to multiple large acquisitions and the approvals of drugs like Daiichi Sankyo and AstraZeneca’s Enhertu.

A growing group of startups are focusing on ADCs too, including recently launched biotechs Tagworks Pharmaceuticals and Dantari.

Emergence is among them. The startup raised a €87 million Series A round in 2021 from a syndicate of U.S. and European investors, aiming to develop ADCs for solid tumors. Its lead program, currently in preclinical studies, is being developed for bladder and triple negative breast cancer. Emergence has claimed ETx-22 may be more selective than Seagen’s drug, which is associated with certain skin-related side effects. It plans to study the drug in other malignancies as well.

The deal is the third by Lilly in June. The company on Thursday announced plans to acquire cell therapy developer Sigilon Therapeutics for up to $310 million, and previously announced a $2.4 billion deal to buy inflammatory disease drugmaker Dice Therapeutics.

In addition to Heidelberg, Emergence is backed by Pontifax Venture Capital, RA Capital Management and OrbiMed. In 2022, the company struck an ADC-focused deal worth up to $360 million with a Dutch biotech called Synaffix.