ARMO Biosciences’ (NASDAQ:ARMO) long-suffering bulls finally have reason to celebrate: The immuno-oncology firm is being acquired by Eli Lilly (NYSE:LLY) in a $1.6 billion deal. As a result, ARMO investors will get $50 a share, about 68% premium to yesterday’s closing price, after seeing their shares tumble to 52-week low in late April.
The acquisition will bolster Lilly’s immuno-oncology program through the addition of ARMO’s lead product candidate, pegilodecakin, a PEGylated IL-10 which has demonstrated clinical benefit as a single agent, and in combination with both chemotherapy and checkpoint inhibitor therapy, across several tumor types. Pegilodecakin is currently being studied in a Phase 3 clinical trial in pancreatic cancer, as well as earlier-Phase trials in lung and renal cell cancer, melanoma and other solid tumor types. ARMO also has a number of other immuno-oncology product candidates in various stages of pre-clinical development.
“At Lilly Oncology, we are dedicated to developing cancer medicines that will make a meaningful difference for patients,” said Sue Mahony, Ph.D., Lilly senior vice president and president of Lilly Oncology. “The acquisition of ARMO BioSciences adds a promising next generation clinical immunotherapy asset to Lilly’s portfolio of innovative oncology medicines.”
“As we develop our immuno-oncology portfolio, Lilly will pursue medicines that use the body’s immune system in new ways to treat cancer,” added Levi Garraway, M.D., Ph.D., senior vice president, global development and medical affairs, Lilly Oncology, “We believe that pegilodecakin has a unique immunologic mechanism of action that could eventually allow physicians to offer new hope for many cancer patients.”
“ARMO is proud of the work we have done to advance the study of immunotherapies and of the development of pegilodecakin to-date,” said Peter Van Vlasselaer, Ph.D., President and Chief Executive Officer of ARMO BioSciences. “Given the resources that Lilly, a leader in oncology R&D, can bring to bear to maximize the value of pegilodecakin and the rest of the ARMO pipeline, we believe it is in the best interest of ARMO, our stockholders and the patients we serve, to execute this transaction.”
Under the terms of the agreement, Lilly will promptly commence a tender offer to acquire all shares of ARMO BioSciences for a purchase price of $50 per share in cash, or approximately $1.6 billion. The transaction is expected to close by the end of the second quarter of 2018, subject to customary closing conditions, including receipt of required regulatory approvals and the tender of a majority of the outstanding shares of ARMO’s common stock. Very shortly after the closing of the tender offer, Lilly will acquire any shares of ARMO that are not tendered into the tender offer through a second-step merger at the tender offer price.