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Lilly (LLY) Inks Deal With Merus to Discover Cancer Antibodies

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Eli Lilly & Company’s (LLY - Free Report) subsidiary, Loxo Oncology announced a deal with Netherlands’ Merus N.V. (MRUS - Free Report) to discover up to three novel T-cell re-directing bispecific antibodies for cancer. The potential medicines will be developed by leveraging Merus’ proprietary CD3 T-cell engager Biclonics platform.

Lilly will make an upfront payment of $40 million to Merus while also investing in the latter’s stock worth $20 million. In addition, Merus will also be eligible to receive up to $540 million in potential milestone payments for one product, which will add up to approximately $1.6 billion for three products. Merus will also be entitled to royalties on sales of any product, if successfully developed under the deal.

While Merus will lead discovery and early-stage development, Loxo Oncology will take care of further development and commercialization activities. Merus’ shares were up 6% on the announcement of the deal.

In the past year, Lilly’s shares have risen 40.9% compared with the industry’s increase of 4.6%.



Lilly regularly adds promising new pipeline assets through M&A deals. Among the recent deals, in December, Lilly announced a definitive agreement to acquire Prevail Therapeutics for $22.50 per share in cash or an aggregate value of $880 million. The acquisition will add Prevail’s promising gene-therapy candidates, targeting neurodegenerative diseases, to Lilly’s portfolio. In November, Lilly entered into a research collaboration and an exclusive license agreement with North Carolina-based biotech Precision BioSciences (DTIL - Free Report) for using the latter’s proprietary genome editing platform to develop potential in vivo therapies for treating genetic disorders, especially Duchenne muscular dystrophy (DMD) and two other undisclosed gene targets.

Lilly currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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