Eli Lilly has agreed to buy Dice Therapeutics for about $2.4 billion in a deal that gives the pharmaceutical giant a promising oral autoimmune disease drug in clinical testing.
Lilly will buy Dice, a young biotechnology company that went public in 2021, for $48 per share in cash, the companies announced Tuesday. The purchase price equates to a roughly 42% premium to Dice shares’ closing price Friday and about 40% above the average trading price over the last month.
The deal is expected to close in the third quarter, pending regulatory clearance and the tender of a majority of Dice’s outstanding stock.
The deal is the biotech sector’s sixth-largest this year, though it carries one of the lower premiums paid by a buyer in 2023, according to data compiled by BioPharma Dive. It also extends a recent surge in dealmaking. Eleven buyouts have now been announced since mid-March, six of which have come since May 10. Over that time, a stock index correlated with the health of the biotech sector has climbed nearly 20%.
In acquiring Dice, Lilly is betting on the prospects of oral drugs the biotech is testing for autoimmune conditions like psoriasis. Dice is one of several companies developing such treatments, which are meant to compare favorably with marketed injectable biologic medicines but with the convenience of a pill.
A number of drugmakers are developing oral treatments that block a protein called TYK2, for instance. The Food and Drug Administration approved the first, a Bristol Myers Squibb medicine named Sotyktu, for psoriasis last year. Several others, like Takeda and Ventyx Biosciences, are following with similar drugs.
Others are focused on different targets. Working with biotech Protagonist Therapeutics, Johnson & Johnson is developing a second-generation medicine aimed at the inflammatory protein IL-23. Executives have said that they expect “biologic-like efficacy” from the approach, with Phase 2 results coming at a medical meeting next month.
Dice is advancing treatments that block an immune system-regulating protein called IL-17. That protein is well known. It’s the target of Lilly’s injectable medicine Taltz and Novartis’ Cosentyx, and is the focus of others like Aceylrin, a young biotech that raised more than half of a billion dollars in an initial public offering in May. Sanofi and biotech Leo Pharma are working on oral IL-17 drugs, too.
Lilly had previously been among those testing oral alternatives, but in 2022 shelved a development candidate of its own after seeing liver toxicity in a Phase 1 study.
Dice’s stock surged after it revealed early data from a small Phase 1 trial in psoriasis last October. The company is enrolling patients with moderate-to-severe disease in a larger and longer mid-stage study that should read out in 2024. The company also has a second medicine that’s meant to be more potent and could deliver early-stage results by the end of the year.
The company is one of only a handful of biotech companies that went public in 2021 to retain its subsequent stock market gains through the current market downturn, according to BioPharma Dive data. Prior to the deal announcement, shares were already trading at about double their $17 per share IPO price in September 2021.