Eli Lilly and Co.’s planned acquisition of Point Biopharma Global Inc. for $1.4 billion is running into some sharp objections from large shareholders of the young biotech, who say the deal is flawed.
The pushback comes just weeks after the Indianapolis-based drugmaker announced it was buying Point, a 4-year-old company also based in Indianapolis.
Point has a pipeline of clinical- and preclinical-stage compounds in development for the treatment of cancer using radiopharmaceutical isotopes that hold the promise of delivering targeted treatments to cancer patients.
Radioligands are seen as a hot, new class of drugs that target cancer cells by linking a radioisotope to a targeting molecule. Together, they deliver radiation directly to cancer cells, enabling significant anti-tumor effectiveness while limiting the damage to healthy tissue.
But now several shareholders are crying foul over the terms of the acquisition.
Point Biopharma’s largest institutional shareholder, Biotechnology Value Fund, which holds about 16% of the stock, said in a Nov. 2 filing that Lilly’s proposed deal in advance of an upcoming study “is not in the best interest” of Point shareholders.
That’s even though the purchase price of $12.50 a share represents an 85% premium over Point’s closing price the day before of $6.68 a share. The deal was announced Oct. 3.
The Biotechnology Value Fund, based in San Francisco, said it does not intend to sell its shares to Lilly. It wants Point shareholders to wait until the biotech company releases the results of a clinical study known as SPLASH.
The company said Monday that patient enrollment in the study is complete, and it expects to publish summary data in the fourth quarter. The trial is studying PNT2002, Point’s lead compound, a radiopharmaceutical in development for patients with metastatic castration-resistant prostate cancer after progression on hormonal treatment.
In its filing, Biotechnology Value Fund (also known as BVF) said it sees negligible downside “and the potential for significant upside” for shareholders to await the results of the SPLASH study before agreeing to the terms of an acquisition.
“Accordingly, in the absence of SPLASH Study results, (BVF) do not intend to tender their shares in support of the acquisition in the initial tender period expiring November 9, 2023,” BVF wrote.
In response, Lilly said last week it was extending the tender offer period to Nov. 16 “in order for the parties to satisfy outstanding closing conditions.”
“The proposed acquisition is expected to close near the end of 2023, subject to customary closing conditions, including the tender of at least a majority of the outstanding shares as of the expiration of the closing offer,” Lilly wrote on Nov. 8.
Officials at Point did not immediately respond to an IBJ request for comment.
A Lilly spokesman sent IBJ the following statement:
“At this time, we have nothing further to add beyond the two press releases issued related to this potential acquisition. We respect the regulatory review process that is currently underway and remain excited by the possibilities of radiopharmaceuticals. We see the acquisition of Point as the beginning of our investment in developing multiple meaningful radioligand medicines for hard-to-treat cancers.”
In addition, at least three other shareholders have filed suit in federal court to try to stop the deal, which they say included a “flawed and inadequate” sales process, conducted in the self-interest of the company.
“The breakdown of the benefits of the deal indicates that Point insiders are the primary beneficiaries of the proposed transaction, not the company’s public stockholders …” said one complaint, filed Oct. 25 by shareholder Jade Trinh of Pennsylvania in U.S. District Court in the Southern District of New York.
Top executives and directors of Point could rake in a total of $212 million from the deal if it closes at $12.50 a share, IBJ reported last month. Point’s top three officials would get the lion’s share of that, according to the company’s filings. Allan Silber, chair, would reap $115.3 million; CEO Joe McCann would get $45.2 million; and Neil Fleshner, chief medical officer, would get $40.7 million.