LONDON, UK / ACCESSWIRE / January 19, 2017 / Active Wall St. blog coverage looks at the headline from Eli Lilly and Co. (NYSE: LLY) and CoLucid Pharmaceuticals, Inc. (NASDAQ: CLCD) as both companies announced an agreement on January 18, 2017, where Lilly will acquire CoLucid for $46.50 per share or for a complete sale value of $960 million. The agreement will be executed in an all-cash transaction and is set to enhance Lilly's existing pain management portfolio in the treatment of a migraine. Register with us now for your free membership and blog access at:
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Breaking down the agreement
This agreement, between the two pharma giants, is set to bring CoLucid's leading drug Lasmiditan to Lilly's portfolio. Lasmiditan was out-licensed to CoLucid by Lilly in 2005. Since then, the drug has passed several milestones including the clearance of the first of the two pivotal Phase-3 trials. The second Phase-3 trial, SPARTAN is expected to be released in the second half of 2017. Subject to the approval of the trial results, the drug could be submitted for US regulatory approval in 2018. Lilly discovered the drug and out-licensed it as pain management was not the Company's prime focus back then.
Lilly's pain management portfolio
Lilly has re-defined its growth strategy and aimed at developing a pain management pipeline. The treatment includes galcanezumab, a potential medicine in Phase-3 clinical development, which can be used for prevention of a migraine and cluster headache. Additionally, tanezumab is under clinical trials, which is a humanized monoclonal immunoglobulin G2 (IgG2) antibody that selectively targets nerve growth factor (NGF), and hence, controls pain processing and sensitivity. In several clinical trials, it was observed to be more effective than oxycodone (an opioid) and naproxen (Active ingredient for Aleve (Bayer)). Under the collaboration with Pfizer Inc. (NYSE: PFE), Lilly agreed to jointly develop and market tanezumab in 2013 for several pain-related conditions including OA and cancer.
Lasmiditan
Lasmiditan is the first drug in the portfolio of migraine therapies, known as "ditans". This drug specifically acts through non-vasoconstrictive mechanisms, and hence, serves the need of patients facing cardiovascular risks. The International Nonproprietary Name (INN) and United States Adopted Name (USAN) has assigned a non-triptan generic stem name, ditan, on the basis of its unique structure, receptor selectivity, and mechanism of action.
CoLucid, on September 06, 2016, announced the achievement of both primary and secondary endpoints in the SAMURAI Phase-3 pivotal trial of Lasmiditan. Conducted under an agreement with the FDA, the trial is expected to enroll up to 2,226 patients with migraine at about 140 sites in the US, UK, and Germany. On June 09, 2016, CoLucid's stocks surged 69%, hence placing the stock prices to an all-time high, after announcing the first of two randomized, double-blind, placebo-controlled trials, for the drug Lasmiditan.
Lilly is expected to recognize a financial charge of about $850 million (no tax benefit), or about $0.80 per share. The recognition is an acquired in-process research and development charge to earnings in the Q1 2017. Lilly has probably made the acquisition in an attempt to capture a drug with large market potential. The non-GAAP EPS guidance will not change owing to this transaction.
Stock Performance
At the close of trading session on January 18, 2017, Eli Lilly's stock price marginally rose 0.88% to end the day at $77.53. A total volume of 3.36 million shares were exchanged during the session. The Company's share price has gained 8.63% in the past one month and 5.41% on YTD basis. The stock is trading at a PE ratio of 33.66 and has a dividend yield of 2.68%. The net market capital for the firm stood at $85.31 billion.
CoLucid Pharma's share price finished yesterday's trading session at $46.25, soaring 32.52%. A total volume of 10.91 million shares exchanged hands, which was higher than the 3 months' average volume of 241.49 thousand shares. The stock has surged 412.18% and 610.45% in the last six months and past twelve months, respectively. The stock's market capitalization as of yesterday's closing price is $881.06 million.
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