Eli Lilly to acquire Massachusetts-based biotech for $309M

Eli Lilly and Co. (IBJ photo)

Eli Lilly and Co. said Thursday it has agreed to buy a small biotech based in Massachusetts that is developing potential treatments for type 1 diabetes  in a deal worth about $309 million.

The Indianapolis-based drugmaker said it will acquire Sigilon Therapeutics Inc., a six-year-old startup  that is developing a technology to help type 1 diabetes patients restore insulin production over sustained periods.

Lilly already owns more than 8% of Sigilon Therapeutics, based in Cambridge, Massachusetts, since it entered a licensing deal in 2018.

The two have worked together to develop so-called “encapsulated cell therapies,” which aim to free patients from constant disease management by sensing blood glucose levels, restoring insulin production and releasing it over the long term.

“Despite significant advancement in treatment for people living with type 1 diabetes, many continue to live with a high disease burden every day,” said Ruth Gimeno, Lilly’s group vice president for diabetes, obesity and cardiometabolic research, said in written remarks. “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.”

Under the terms of the agreement, Lilly will acquire all outstanding shares of Sigilon for about $34.6 million, or $14.92 per share—a hefty premium over the company’s closing price Monday of $3.93 a share.

Lilly will also give Sigilon shareholders one “non-tradeable contingent value right” per share, worth up to $111.64 per share. The total value of the deal was $309.6 million.

Shares of Sigilon soared 525% in midday trading, to $24.31.

Lilly said the transaction is expected to close in the third quarter. Sigilon was formed in 2016 by Flagship Pioneer, a life-science venture capital firm.