"Another One" - DJ Khaled Eli Lilly... 

Eli Lilly just scooped up Adverum Biotechnologies in what I call a a mercy acquisition. The deal’s worth up to $261.7 million but what most people don’t realize is that Lilly basically found Adverum half-dead in a ditch and decided to take it home. Case in point: The biotech had about $44 million in the bank and was scheduled to run out of cash this month. Like, right now. Meaning, if Lilly hadn’t shown up with straight cash, the company would’ve been RIP by Halloween. 

(Source: Giphy) 

However, the prize here isn’t a dead weight company… it’s one shot. Literally. Adverum’s “one-and-done” gene therapy, Ixo-vec, aims to treat wet age-related macular degeneration… which in fact is NOT a pre-ejaculation disorder but instead a leading cause of blindness that currently forces patients into endless eye injections. The market’s massive (1.5M patients in the U.S.), but it’s also stacked with Regeneron’s Eylea and Roche’s Lucentis, which dominate majority of the space. Translation: Lilly’s betting Ixo-vec can turn that into a single jab that fixes vision for life. Sounds legit. 

(Source: Reuters) 

As for the deal, shareholders get $3.56 in cash per share (which is somehow less than what it was trading for on Thursday), plus a “CVR” that could be worth up to $8.91 more if Ixo-vec: #1. Gets FDA approval within seven years, and #2. Sells $1 billion annually within ten. So yeah, if everything goes perfectly… they’ll make money by 2035. Until then, Lilly’s only really out $74.7 million upfront, which is basically DoorDash tip for them. 

With that said, why was Adverum vulnerable to begin with? Good question. The company’s been on life support since the pandemic. Their previous attempt at an eye therapy literally blinded a patient, their cash reserves evaporated, and every investor presentation read like a cry for help. Now, Lilly… fresh off its $1.3 billion Verve Therapeutics acquisition… is on a distressed gene therapy binge. But it fits their playbook: buy broke innovators, throw real money at the problem, and pray for a blockbuster.

(Source: Giphy)

Additionally, Lilly says this could “transform eye care” and “simplify treatment from chronic care to a single therapy.” In other words, if this thing works, no more recurring shots… and no more recurring revenue for everyone else. Which is exactly why the rest of the industry suddenly looks nervous. In fact, TD Cowen is already calling it a potential $1.3 billion annual product by 2033. 

So yeah… Adverum just sold their soul to Lilly for cheap change. If it pays off, they’ll own the next generation of vision care. If it doesn’t… well, at least Adverum didn’t have to die blind. Until next time, friends… 

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.