Lilly-Verve deal sends gene editing stocks higher

Biotech firms focused on gene therapies traded higher after Eli Lilly (NYSE:LLY) agreed to acquire Boston-based gene-editing startup Verve Therapeutics (NASDAQ:VERV) for a total consideration of up to $1.3B, marking a positive catalyst for the beaten-down industry.

Notable gainers include Editas Medicine (EDIT), Prime Medicine (PRME), Intellia Therapeutics (NTLA), CRISPR Therapeutics (CRSP), and Beam Therapeutics (BEAM), all of which have recorded sharp declines over the past 12 months.

Wall Street reacted positively to LLY’s latest buyout offer, sending shares of base and CRISPR-Cas gene editing-focused VERV ~74% higher, as the deal, which included a contingent value right, indicated over a 100% premium to the company’s 30-day average share price.

However, BMO Capital Markets was uncertain about the rationale for the transaction, arguing that “We are skeptical about the true market need of additional genetic medicines in these indications.”

“While the proposed deal size is low relative to Lilly’s investment firepower, we think there may be better uses of capital for the company at this time,” BioSpace reported, quoting a research note from the firm.

However, William Blair was more upbeat, noting that the deal was highly beneficial for Verve (NASDAQ:VERV) shareholders, who are positioned to receive payments linked to the CVR over the next few years, and the Indiana-based pharma giant is acquiring the biotech at a bargain.