Morphic (MORF) Experiences Pre-Market Surge Following Acquisition Announcement

Shares of Morphic Holding, Inc. (NASDAQ: MORF) are experiencing a significant increase this morning prior to market opening after a stable previous session. At the most recent pre-market check, MORF stock was up 76.66% to $56.25, propelled by the announcement of a takeover attempt.

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Definitive Agreement with Eli Lilly

Morphic (MORF) has reached a formal agreement to be acquired by Eli Lilly. According to the agreement, Eli Lilly will initiate a tender offer to purchase all outstanding shares of Morphic for $57 per share in cash, with the total amount estimated to be around $3.2 billion at closing. The boards of directors of both companies have approved this deal, which is not contingent on any financial criteria and is expected to close in the third quarter of 2024.

Following the tender offer, Eli Lilly will acquire any remaining Morphic shares through a second-step merger at the same price per share as the initial offer. The purchase price represents a premium of approximately 79.0% over Morphic’s closing stock price on July 5, 2024, and an 87.2% premium over the volume-weighted 30-day average trading price of Morphic’s common stock as of July 5, 2024, the final trading day before the announcement.

Strategic Implications

Eli Lilly is well-positioned to advance its efforts in developing breakthrough medications in the field of gastroenterology, where it has made significant investments. Morphic’s primary program focuses on an orally administered small molecule inhibitor of α4β7 integrin, aimed at treating inflammatory bowel disease (IBD). Presently, two Phase 2 studies for ulcerative colitis and one Phase 2 research for Crohn’s disease are evaluating this medication, called MORF-057.

Additionally, Morphic is developing a preclinical pipeline of medications for cancer, fibrotic diseases, pulmonary hypertensive disorders, and autoimmune diseases. Utilizing Morphic’s Integrin Technology platform to capitalize on the potential of integrin therapeutics is demonstrated by MORF-057. MORF-057, an oral small molecule α4β7 inhibitor, may provide increased effectiveness and tolerance, hence creating new therapeutic options for IBD.