Eli Lilly and Co said on Friday it would buy skin disease specialist Dermira Inc (DERM.O) for about $1.1B in cash, bolstering its arsenal with an experimental therapy for skin condition atopic dermatitis.
Lilly will pay $18.75 per Dermira share, or a 2.2% premium to Dermira’s last closing price. It said the price represented a premium of about 86% to Dermira’s 60-day volume-weighted average trading price including Friday’s closing price.
Dermira shares, which have doubled in the last one month, rose 5.1% to $19.28, rising over the offer price.
The share movement has some investors questioning if another bidder might step up for Dermira, Cantor Fitzgerald analyst Louise Chen said.
Chen said Pfizer Inc (PFE.N) could be interested in atopic dermatitis treatments, but noted that it was already testing a drug for the condition which causes red and itchy skin.
With the acquisition, Lilly gets Dermira’s experimental treatment for atopic dermatitis, a common form of eczema, which is in late-stage testing, as well as an approved medicated cloth for excessive armpit sweating.
Dermira gained some rights to the eczema drug, lebrikizumab, in 2017 from Roche AG (ROG.S), and last year signed a deal with Almirall SA (ALM.MC) for an option to license European rights to the drug.
If approved, lebrikizumab would compete with Regeneron Pharmaceuticals Inc (REGN.O) and Sanofi SA’s (SASY.PA) Dupixent, with some analysts forecasting peak sales upwards of $600M in 2027.
The drug, which belongs to a class of treatments known as monoclonal antibodies, would add to Lilly’s immunology treatments, including the psoriasis treatment Taltz.
Last year Eli Lilly paid out a hefty sum of $8B for Loxo Oncology Inc for its pipeline of cancer drugs that target rare genetic mutations.
Lilly has been focused on increasing sales in core franchises such as cancer, as sales of its older blockbuster medicines such as diabetes treatment Humalog face pressure from generic competition.
“The acquisition of Dermira is consistent with Lilly’s strategy to augment our own internal research by acquiring clinical phase assets,” said Patrik Jonsson, president of Lilly Bio-Medicines.
Lilly is also testing another drug, Olumiant or baricitinib, as a treatment for atopic dermatitis.
Evercore was the exclusive financial adviser for Lilly, while Dermira’s financial advisers were SVB Leerink and Citi, the lead adviser.