Shares of Sigilon Therapeutics SGTX surged 440.9% on Jun 29, after the company announced that it has signed a definitive agreement with Eli Lilly LLY. Lilly will acquire all the outstanding shares of Sigilon for an upfront payment of $14.92 per share in cash, aggregating to $34.6 million.
Existing shareholders will also be eligible to receive one non-tradeable contingent value right (“CVR”) per share, which will entitle the holder to receive up to $111.64 per share. This CVR, which is tied to clinical and regulatory milestones, brings the total value of the deal up to $309.6 million. Per the terms of the agreement, the CVR holders would be entitled to receive contingent payments of $4.06 per share in cash upon first dosing of a specified product in the first human clinical study, $26.39 per share in cash in the first human clinical study for registration and $81.19 per share in cash upon receipt of the first regulatory approval of a specified product.
This acquisition deal is an extension of an agreement entered between the companies in 2018 to jointly develop encapsulated cell therapies for treating type 1 diabetes (“T1D”). Using these therapies, Lilly intends to develop novel therapies that free patients from constant disease management by sensing blood glucose levels, restoring insulin production and releasing it over the long term.
Sigilon’s most advanced pipeline candidate is SIG-002, an islet cell therapy solution, which is being developed in collaboration with Lilly as a potential treatment for T1D. Management intends to submit an investigational new drug (IND) application to the FDA for SIG-002 next year to start clinical studies on the same.
The transaction, expected to be completed by third-quarter 2023, is subject to customary closing conditions and clearance from the regulatory authorities. The board of directors of Eli Lilly and Sigilon Therapeutics have also given their approval to this transaction.
In the year so far, shares of Sigilon Therapeutics have surged 364.7% against the industry’s 3.4% fall.
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Sigilon Therapeutics is a preclinical-stage biotechnology company that utilizes its proprietary Shielded Living Therapeutics (“SLTx”) platform to develop new molecule therapies for patients with acute and chronic diseases. The company, which currently lacks a steady stream of revenues due to a lack of approved drugs, is entirely dependent on its pipeline for growth.
An acquisition by a big pharma giant like Lilly, which has high reserves of cash flow, would allow the company to ramp up the development of its pipeline.Once the pipeline candidates are approved for marketing, Sigilon Therapeutics will have access to Lilly’s larger and well-established commercial supply chain and network distribution.
The acquisition is also a strategic fit for Lilly’s existing business since it helps focus on developing long-terms solutions to diseases like T1D. Eli Lilly has a strong portfolio of medicines to treat diabetes that includes drugs like Tradjenta, Jardiance, Trulicity, Synjardy, Glyxambi, Trijardy XR and Basaglar (basal insulin).
Sigilon Therapeutics, Inc. Price
Sigilon Therapeutics, Inc. price | Sigilon Therapeutics, Inc. Quote
Zacks Rank & Other Stocks to Consider
Sigilon currently carries a Zacks Rank #2 (Buy). Some other top-ranked stock in the overall healthcare sector are AbbVie ABBV and Novartis NVS, which also carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, the estimate for AbbVie’s 2023 and 2024 EPS have increased from $10.95 to $10.99 and $11.02 to $11.04, respectively. Shares of AbbVie are down 17.6% in the year-to-date period.
Earnings of AbbVie beat estimates in each of the last four quarters, witnessing an average earnings surprise of 1.78%.
In the past 60 days, the estimate for Novartis’ 2023 and 2024 EPS have increased from $6.60 to $6.74 and $7.11 to $7.28, respectively. Shares of Novartis are up 9.5% in the year-to-date period.
Earnings of Novartis beat estimates in each of the last four quarters, witnessing an average earnings surprise of 5.15%.
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