Shares of Loxo Onocology (ticker: LOXO) were indicated up about 65% in premarket trade Monday, after the biopharmaceutical company agreed to be acquired by Eli Lilly (LLY) in a deal valued at $8.0 billion. Lilly’s stock fell 2.0% ahead of the open.
Under terms of the deal, Lilly will pay $235 in cash for each Loxo share outstanding, which represents a 68% premium to Friday’s closing price of $139.87, and 24% above Loxo’s record close of $189.96 on July 6, 2018.
The deal is the largest in a series of acquisitions by Lilly to broaden its cancer treatment efforts, Lilly said. The deal is expected to close by the end of the first quarter. The company said it will provide an update to 2019 financial guidance, when it reports fourth-quarter results on Feb. 13.
Loxo shares have lost 12.4% over the past three months and Lilly shares have eased 0.3%, while the SPDR Health Care Select Sector ETF has shed 8.8% and the S&P 500 has declined 12.3%.
Eli Lilly to buy Loxo Oncology for about $8 billion in cancer bet
The offer of $235 per share in cash represents a premium of about 68 percent to Loxo’s Friday close. Loxo’s shares surged 32.8 percent to $185.70 in light trading before the bell, while those of Lilly dropped 2.7 percent to $111.60.
Last year, U.S. regulators approved Loxo’s first commercial medicine, Vitrakvi, which was shown to be effective against a wide variety of cancers driven by a single, rare genetic mutation. The drug is sold in partnership with Bayer.
Loxo Oncology is developing a pipeline of targeted medicines focused on such cancers that can be detected by genomic testing.
Deutsche Bank is Lilly’s financial adviser and Weil, Gotshal & Manges is its legal adviser. Goldman Sachs is the financial adviser, while Fenwick & West is legal adviser to Loxo.
—CNBC contributed to this report.
Castleark Management LLC decreased its holdings in Loxo Oncology Inc (NASDAQ:LOXO) by 3.4% in the third quarter, according to the company in its most recent 13F filing with the SEC. The fund owned 32,445 shares of the biopharmaceutical company’s stock after selling 1,150 shares during the quarter. Castleark Management LLC owned 0.11% of Loxo Oncology worth $5,543,000 at the end of the most recent quarter.
Other hedge funds and other institutional investors have also added to or reduced their stakes in the company. Man Group plc raised its holdings in Loxo Oncology by 8.1% during the 3rd quarter. Man Group plc now owns 27,208 shares of the biopharmaceutical company’s stock valued at $4,648,000 after buying an additional 2,039 shares during the period. Pacer Advisors Inc. purchased a new stake in Loxo Oncology during the 3rd quarter valued at $255,000. Jane Street Group LLC purchased a new stake in Loxo Oncology during the 3rd quarter valued at $664,000. Deutsche Bank AG increased its stake in Loxo Oncology by 41.2% in the third quarter. Deutsche Bank AG now owns 228,429 shares of the biopharmaceutical company’s stock worth $39,021,000 after purchasing an additional 66,647 shares during the period. Finally, LPL Financial LLC purchased a new stake in Loxo Oncology in the third quarter worth $244,000. 96.80% of the stock is owned by hedge funds and other institutional investors.
Shares of Loxo Oncology stock traded up $8.85 on Friday, reaching $139.87. The company’s stock had a trading volume of 328,940 shares, compared to its average volume of 342,267. The stock has a market capitalization of $4.29 billion, a PE ratio of -26.34 and a beta of 1.93. Loxo Oncology Inc has a 52-week low of $82.74 and a 52-week high of $208.95.