Lilly acquires Scorpion Therapeutics in deal worth up to $2.5B
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Eli Lilly and Co. announced Monday that it is buying Boston-based Scorpion Therapeutics and its targeted breast cancer treatment program in a deal worth up to $2.5 billion.
The Indianapolis-based drugmaker will acquire Scorpion’s STX-478, a once-daily oral treatment in early trials for breast cancer and other advanced solid tumors. The therapy is designed to target PI3Ka gene mutations.
“We look forward to leveraging the great work of the Scorpion team to date, along with Lilly’s deep expertise in breast cancer, to further advance STX-478 with speed and focus,” Jacob Van Naarden, executive vice president and president of Lilly Oncology, said in written remarks.
The deal expands Lilly’s oncology pipeline. STX-478 potentially could address 30% to 40% of patients with hormone-positive breast cancer, according to Lilly.
Lilly’s current offerings include Verzenio for early and metastatic breast cancers. Verzenio, which Lilly has heavily advertised in recent years, is a top seller for Lilly, with sales of almost $3.8 billion in the first nine months of 2024, up 38 percent from the same period the year before.
Lilly is flush with cash, so it can make strategic acquisitions like Scorpion with treatments still in early to mid-clinical trials, according to one observer.
“It unlocks a new potentially huge market that also potentially changes the broad standard of care for oncology,” said Roger Lee, the recent former director of research with Kirr, Marbach & Co., an investment adviser in Columbus, Indiana. “It’s a very small bet for a very big company, but this could be something that’s very disruptive.”
He added that with an aging population Lilly likely sees huge potential for targeted therapies. “My guess is it wouldn’t be just breast cancer,” Lee said. “This would also set up to treat other cancers, but you start with breast cancer.”
Scorpion’s Van Naarden said STX-478 could be used in combination with standard-of-care therapies to potentially deliver meaningful impact in earlier treatment when there is the best opportunity to improve outcomes for patients.
A PI3Ka mutation causes uncontrolled cell division and replication, which is linked to breast cancer and other cancers. The goal of a PI3Ka inhibitor like STX-478 is to target that out-of-control process.
Under the terms of the deal, Scorpion shareholders could receive up to $2.5 billion in cash in upfront and subsequent payments dependent on the achievement of certain regulatory and sales metrics. Also, Scorpion will spin off a new company holding its employees and non-PI3Ka assets. Current Scorpion shareholders will own that new independent company with Lilly holding a minority stake.
Scorpion was founded in 2020 with the mission of developing small-molecule cancer drugs that address the needs of large patient populations.
“We believe Lilly’s global capabilities and strategic commitment to patients with breast cancer will accelerate our goal of developing STX-478 to improve outcomes for the many patients with solid tumors driven by PI3Kα mutations,” Scorpion CEO Adam Friedman said in written remarks.
Lilly did not provide a timeline for closing the deal.
Shares in Lilly were down about 0.3%, to $797.48 at close of trading Monday.