Filings reveal Eli Lilly was sole bidder for Loxo Oncology in speedy purchase process

According to documents released Thursday, Eli Lilly was the sole bidder for Loxo Oncology and took less than three weeks from an initial offer to reaching an agreement to acquire the company. The filings with the US Securities and Exchange Commission reveal that Eli Lilly first tabled an offer worth $230 per share, which was rebuffed, before coming back with an improved bid of $235 per share, or around $8 billion, which was accepted.

The documents note that Loxo chief executive Joshua Bilenker initially met with Levi Garraway, Eli Lilly's senior vice president of oncology R&D, last April and discussed Loxo, as well as Eli Lilly's oncology business. According to the documents, Bilenker then reached out to Garraway in December to discuss Loxo's R&D strategy and company objectives, with Eli Lilly expressing interest in purchasing the drugmaker later in the month.

Eli Lilly officially submitted its initial bid of $230 per share on December 20, representing a 73.6-percent premium to Loxo's share price, with the company explaining that the all-cash offer would not require external financing. After granting Eli Lilly access to due diligence materials, Loxo's board said that the offer needed to be increased, while Eli Lilly agreed to sweeten its bid to $235 per share, reflecting a 75-percent premium to Loxo's share price on December 28.

Meanwhile, the documents indicate that Eli Lilly and its advisors informed Loxo that the revised offer represented its maximum bid. The documents show that Eli Lilly was keen to announce the acquisition at the J.P. Morgan Healthcare Conference, which was held earlier this month, with the deal revealed on the first day of the meeting.

According to the filings, Loxo's board also discussed whether to solicit proposals from third parties, but concluded that the risks outweighed the benefits The documents reveal that Loxo previously reached out to more than 15 companies after reporting positive Phase I data for LOXO-292 with regards the possibility of a licensing transaction for the experimental RET inhibitor. The filings indicated that talks with four of these parties continued into December last year, but Loxo noted that "the terms that were proposed, including for global licensing partnerships, remained unattractive."

For related analysis, see ViewPoints: Expensive but well timed; Eli Lilly's Loxo acquisition seeks to capture a groundswell of oncologist enthusiasm for precision medicine, and also ViewPoints: Eli Lilly embraces precision medicine with Loxo acquisition.

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