CoLucid Pharmaceuticals Inc (NASDAQ:CLCD) saw it’s shares jumping over 30% in pre-market trading after announcing a definitive merger agreement with Eli Lilly. Under the terms of the agreement, Eli Lilly will acquire all shares of CoLucid for a purchase price of $46.50 per share or approximately $960 million. This all-cash transaction will enhance Lilly’s existing portfolio in pain management for migraine, while adding a potential near-term launch to its late-stage pipeline.
“Lasmiditan is a novel, first-in-class molecule that could represent the first significant innovation for the acute treatment of migraine in more than 20 years, and CoLucid has made significant progress in advancing this potential medicine,” said David A. Ricks, Lilly’s president and chief executive officer. “This innovation, along with galcanezumab, could offer important options for the millions of patients suffering from migraine.”
Lasmiditan was originally discovered at Lilly and was out-licensed to CoLucid in 2005. Over the past 12 years, CoLucid has taken important steps to decrease the risk related to development and commercialization of lasmiditan as evident by the first positive Phase 3 trial. At the time lasmiditan was out-licensed, pain management was not a strategic area of focus for Lilly. Lilly has since reorganized its research and development efforts to focus on migraine as part of its emerging therapeutic area of pain.
“We are excited that lasmiditan will be back at Lilly, where it was originally discovered, for the conclusion of Phase 3 development and potential commercialization,” said Thomas P. Mathers, CoLucid’s chief executive officer. “We are proud of the work that CoLucid has done to develop lasmiditan, and we believe Lilly’s expertise in pain and commitment to innovation are a natural fit to potentially bring this medicine to patients.”
Under the terms of the agreement, Lilly will acquire all shares of CoLucid Pharmaceuticals for a purchase price of $46.50 per share or approximately $960 million. The transaction is expected to close by the end of the first quarter of 2017, subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.
While the financial charge will not be finalized until after completion of the acquisition, Lilly is expecting to recognize a financial charge of approximately $850 million (no tax benefit), or approximately $0.80 per share, as an acquired in-process research and development charge to earnings in the first quarter of 2017. The company’s reported earnings per share guidance in 2017 is expected to be reduced by the amount of the charge. There will be no change to the company’s non-GAAP earnings per share guidance as a result of this transaction.
On the ratings front, CLCD has been the subject of a number of recent research reports. In a report issued on December 22, BTIG analyst Robert Hazlett initiated coverage with a Buy rating on CLCD and a price target of $58, which represents a potential upside of 66% from last closing price. Separately, on December 15, Barclays’ Douglas Tsao initiated coverage with a Buy rating on the stock and has a price target of $45.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Robert Hazlett and Douglas Tsao have a yearly average loss of 7.0% and a return of 7.9% respectively. Hazlett has a success rate of 33% and is ranked #3766 out of 4350 analysts, while Tsao has a success rate of 56% and is ranked #697.
CoLucid Pharmaceuticals, Inc. engages in the development of therapeutics for neurological disorders. Its products include Lasmiditan, a neurally acting anti-migraine agent that is designed to deliver efficacy in migraine without the vasoconstrictor activity associated with previous generations of migraine therapies; and a Conjugated Stigmines platform that has generated a series of preclinical candidates for the chronic pain, Alzheimer’s disease and psychiatric disorders. The company was founded by James F. White and Arthur M. Pappas in December 2005 and is headquartered in Cambridge, MA.