Pharma behemoth Eli Lilly will pay $250 million upfront for the rights to three gene-editing drugs from Verve Therapeutics, the companies said Tuesday. VERV stock skyrocketed in Tuesday trades.
Verve hopes to use gene-editing drugs to permanently lower two proteins tied to elevated levels of "bad" LDL cholesterol and triglycerides. It also has a third undisclosed cardiovascular target in development.
Previously, Verve partnered with Beam Therapeutics. But Lilly will buy Beam's opt-in rights for the three cardiovascular programs for $200 million in cash and a $50 million equity investment in Beam stock. Beam will also be eligible for up to $350 million in future milestone payments.
Leerink Partners analyst Mani Foroohar says Lilly is "an excellent steward for these rights." Lilly already partners with Verve on another gene-editing drug targeting lipoprotein A, a genetic risk factor for heart disease, stroke, blood clots and hardening of the vessels.
On today's stock market, VERV stock soared 28% to 12.04. Beam stock surged 10.6% to 21.14. Eli Lilly stock, on the other hand, skidded 2.1% to 553.93.
VERV Stock: Lilly Opts In
Verve's treatments target PCSK9 and ANGPTL3. Increases in these proteins can lead to high "bad" LDL cholesterol and triglycerides.
Bullishly for VERV stock, Lilly now owns the opt-in rights for both these drugs. It will be able to share 33% of worldwide development expenses, and to jointly commercialize and share profits and expenses equally in the U.S. Lilly will also have the right to op-in to co-fund and share in profits for a third target.
"We are thrilled to gain Lilly as a potential long-term partner for the next stage of development of our gene-editing medicines for people with (heart disease)," Verve Chief Executive Sekar Kathiresan said in a statement.
Lilly's decision comes roughly a week after the Food and Drug Administration cleared Verve to run a test of its gene-editing cholesterol drug in U.S. patients. Verve has already been testing the drug in the UK and New Zealand.
RBC Capital Markets analyst Luca Issi noted Verve's gene-editing drug could have a key benefit over the typical statin routine for high cholesterol patients: it's a one-time treatment. Compliance can be poor for patients taking statins on a daily basis. Eventually, Verve imagines it could expand the drug to a broader pool of patients.
"Lilly offers pharma validation and we continue to like an approach that can solve compliance," he said in a report to clients.
Beam Stock Closes In On 50-Day Line
Issi has an outperform rating on VERV stock and a 35 price target. He is less constructive on Beam stock and has a sector perform rating with a 27 price target.
"The deal allows Beam to monetize programs that it was unlikely to opt-in given that they come with material development costs and in the context of recent corporate restructuring that led to a 20% reduction in workforce," Issi said in a note.
Shares of Verve briefly retook their 50-day moving average after the company announced the Lilly deal, according to MarketSmith.com. Still, VERV stock has a low IBD Digital Relative Strength Rating of 7, putting it in the bottom 7% of all stocks in terms of 12-month performance. Beam stock has an RS Rating of 10.
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