Source – Eli Lilly
On June 29, 2023 Eli Lilly and Company and Sigilon Therapeutics entered into a definitive agreement, with Lilly acquiring Sigilon, a biopharmaceutical company dedicated to developing functional cures for a wide range of acute and chronic diseases.
Since 2018, Lilly and Sigilon have collaborated on the development of encapsulated cell therapies, including SIG-002, for the treatment of type I diabetes. These therapies aim to alleviate the burden of constant disease management by monitoring blood glucose levels, restoring insulin production, and providing long-term release.
“Despite significant advancement in treatment for people living with type 1 diabetes, many continue to live with a high disease burden every day. By combining Sigilon’s talent and expertise in cell therapy with the knowledge and skills of Lilly’s research and development teams, we will enhance opportunities to create innovative islet cell therapy solutions to improve the care of people living with diabetes.”
– Ruth Gimeno, Ph.D., group vice president, diabetes, obesity and cardiometabolic research at Lilly
“This agreement represents the culmination of the important work led by our research and development team to continue advancing SIG-002 at Lilly – the preeminent leader in the treatment of diabetes. As a person with type I diabetes and a treating physician, I am a passionate believer in the potential of SIG-002 and am very proud of our team’s accomplishments in developing and optimizing this product candidate using our novel platform technology. With deep industry expertise, Lilly is well-positioned to apply its industry-leading clinical and technical capabilities to harness the full potential of SIG-002 for the benefit of patients and their caregivers.”
– Rogerio Vivaldi, M.D., CEO of Sigilon
As per the terms of the agreement, Lilly will initiate a tender offer to purchase all outstanding shares of Sigilon at a cash price of $14.92 per share, totaling approximately $34.6 million, payable upon closing. In addition, each share will be accompanied by a non-tradeable contingent value right (“CVR”), allowing the holder to potentially receive up to an additional $111.64 per share in cash, resulting in a total potential consideration of up to $126.56 per share in cash, without interest.
Related: LILLY’S SURMOUNT-2 STUDY SHOWS TIRZEPATIDE ACHIEVES SIGNIFICANT 15.7% WEIGHT REDUCTION IN ADULTS WITH OBESITY AND TYPE 2 DIABETES
CVR holders may receive contingent payments as follows:
(i) $4.06 per share in cash upon the first dosing of a specified product in the first human clinical trial.
(ii) $26.39 per share in cash upon the first dosing of a specified product in the first human clinical trial for registration purposes.
(iii) $81.19 per share in cash upon the receipt of the first regulatory approval of a specified product. However, there is no guarantee that any payments will be made with respect to the CVRs.
The transaction is not contingent on financing and is expected to be finalized in the third quarter of 2023, subject to customary closing conditions. This includes Lilly owning a majority of Sigilon’s outstanding common stock after the tender offer. Once the tender offer is successfully completed, Lilly will acquire any remaining shares of Sigilon through a second-step merger at the same price as the tender offer. Sigilon’s board of directors unanimously recommends that stockholders tender their shares in the offer.
Upon closing, Lilly will determine the accounting treatment of the transaction, whether as a business combination or an asset acquisition, including any relevant charges for acquired in-process research and development, in accordance with Generally Accepted Accounting Principles (GAAP). The financial results and guidance provided by Lilly will reflect the impact of this transaction.
