Eli Lilly‘s (LLY -2.43%) latest acquisition didn’t exactly meet with widespread shareholder approval on Tuesday. After announcing that it signed a deal to acquire Point Biopharma Global (PNT 84.89%), its share price headed south to end the day 2.4% lower. That was a steeper fall than the 1.4% dip of the S&P 500 index.
Before market open, Eli Lilly divulged that it has agreed to acquire Point for a total of roughly $1.4 billion in cash, or $12.50 per share. The latter is nearly double Point’s closing share price on Monday. Eli Lilly didn’t hesitate to mention that the boards of directors of both companies have approved the deal.
The move comes amid heavy demand for cancer therapies, a segment in which many pharmaceutical companies and biotechs are competing. Eli Lilly’s cancer drug Alimta has been successful, and the company wants to expand on this to be more of a presence in the segment. Investors might consider the Point deal an indication that Eli Lilly still has some distance to reach this goal.
Point is a development-stage biotech that concentrates on radioligand therapy, a form of precision targeting of cancer cells, to fight the disease. Its leading development program, PNT2002, is one such therapy that treats forms of prostate cancer. Eli Lilly said that top-line data from phase 3 testing of the medication is expected by the end of this year.
In its press release on the Point acquisition, Eli Lilly quoted the president of its oncology unit, Jacob Van Naarden, as saying, “We are excited by the potential of this emerging modality and see the acquisition of Point as the beginning of our investment in developing multiple meaningful radioligand medicines for hard-to-treat cancers, as we have done in small molecule and biologic oncology drug discovery and development.”
Management expects the Point deal to close near the end of this year.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Point Biopharma Global. The Motley Fool has a disclosure policy.