It's a dog-eat-dog world: Elanco snaps up KindredBio for $440M

Two years after completing its separation from Eli Lilly and less than a year after closing the $6.9 billion acquisition of Bayer Animal Health, Elanco is fetching another bone.

Greenfield, Indiana-based Elanco Animal Health will buy Kindred Biosciences for approximately $440 million to boost its pipeline in the pet health market. KindredBio gives Elanco three potential blockbusters in dermatology that are expected to come to market through 2025, which is slated to provide Elanco an additional $100 million in innovation revenue by that year.

“This highly complementary combination is focused in one of the most exciting spaces in pet health, and one where we see a strategic imperative to build a differentiated competitive offering,” said Jeff Simmons, Elanco CEO and president, in a statement.

KindredBio’s monoclonal antibody R&D programs could also give Elanco room to grow in chronic disorders such as canine parvovirus.

Elanco had already snagged the global commercial rights to KindredBio's late-stage treatment for parvovirus. The treatment, called KIND-030, demonstrated 100% survival in dogs infected by parvovirus versus a 43% survival rate for dogs treated with placebo, KindredBio said June 2. The company expects possible approval from the USDA by year-end.

"With 100% efficacy, we believe KIND-030 has the potential to revolutionize the care of these dogs,” said KindredBio CEO Richard Chin, M.D., in a statement earlier this month.

The canine parvovirus treatment could be a lucrative asset for Elanco as KindredBio claims there is no currently available treatment for it.

"With this transaction with Elanco, a widely respected leader in veterinary medicine with global reach, we will maximize the impact our innovative pipeline will have on improving the lives of pets,” Chin said in a statement on Wednesday’s deal.

The deal, at $9.25 per share, is a premium of 52% based on a 30-day average and will be funded with pre-payable debt.

Investors clearly like the transaction and have pushed KindredBio's shares up 45% to $9.19 as of 11:37 a.m. ET. Elanco was trading 3% higher at $35.90.

Elanco, which is more than 65 years old, has been expanding its pipeline since becoming an independent company in March 2019. The animal health company has a broad portfolio of vaccines, pet therapeutics and other products for dogs, cats, farm animals and poultry that it is trying to broaden.

RELATED: Aratana Therapeutics Files for First FDA Approval

Last August, Elanco closed its acquisition of Bayer Animal Health, a deal that gave Elanco five expected launch equivalents, dosing and delivery technology, as well as rights to Bayer’s crop science R&D pipeline.

Further yet, in July 2019, Elanco completed an acquisition of Aratana Therapeutics, a dog and cat therapeutics company. The deal gave Elanco a canine non-steroidal anti-inflammatory drug for osteoarthritis.

The broader pet health space has been active in recent months. Whitebridge Pet Brands completed its acquisition of supplement maker Grizzly Pet Products in March and Petco Health and Wellness returned to the public markets in January after first going public in 1994.