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Eli Lilly (LLY) to Buy Hearing Loss Gene Therapy Maker Akouos

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Eli Lilly and Company (LLY - Free Report) announced a definitive agreement to acquire Boston-based Akouos, , which is developing gene therapies for the treatment of inner ear conditions, including hearing loss, for an aggregate amount of up to approximately $610 million.

Akouos’ lead pipeline candidate is AK-OTOF, a gene therapy intended for the treatment of OTOF-mediated hearing loss, a form of sensorineural hearing loss caused by mutations in the OTOF gene. Last month, the FDA cleared an investigational new drug (IND) submission, which was filed to begin clinical studies on the candidate. Akouos plans to initiate a pediatric phase I/II study on AK-OTOF for OTOF-mediated hearing loss soon. 

The stock has risen 21.3% this year so far against a decline of 2.4% for the industry.

 

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Akouos’ other pre-clinical pipeline candidates are being developed to treat multiple inner ear conditions. These include AK-CLRN1 for Usher Type 3A, a genetic disorder that causes loss of both hearing and vision, and AK-antiVEGF for the treatment of vestibular schwannoma, a type of benign tumor that grows in the inner ear. Akouos is targeting an IND submission for AK-antiVEGF in 2023.

Per the deal terms, Lilly will acquire all the outstanding shares of Akouos for $12.50 per share in cash, plus one contingent value right (CVR) worth up to $3.00 per share. This values the transaction at approximately $487 million plus a contingent value right for an aggregate amount up to approximately $610 million. The upfront purchase price of $12.50 represents a premium of 78% over Akouos’ closing price on Monday. The deal is expected to close in the fourth quarter. Akouos’ shares were up 88% on Tuesday in response to the deal with Lilly.

In the gene therapy field, Lilly acquired Prevail Therapeutics in 2021 that added promising gene-therapy candidates targeting neurodegenerative diseases to Lilly’s portfolio. These include PR001 (now LY3884961) for Parkinson's disease and neuronopathic Gaucher disease, and PR006, for frontotemporal dementia, which is in clinical development.

In 2020, Lilly entered into a gene-editing research collaboration and 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, for up to six gene targets, with an initial focus on Duchenne muscular dystrophy (DMD) and two other undisclosed gene targets.

Precisely, Precision BioSciences took the responsibility for the pre-clinical research and IND-enabling activities, while Lilly will lead clinical development and commercialization. Also, Lilly will have the option to select up to three additional gene targets for this collaboration.

Zacks Rank & Stocks to Consider

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

A better-rank large biotech is Vertex Pharmaceuticals Incorporated (VRTX - Free Report) which has a Zacks Rank of 2 (Buy).

Vertex’s stock has risen 36.7% this year so far. Vertex’s earnings estimates have gone up from $14.10 per share to $14.21 per share for 2022 over the past 90 days.

Vertex’s earnings beat estimates in three the last four quarters, delivering a surprise of 4.52%, on average.


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