Eli Lilly has dug into the biotech bargain bin for its latest buyout, emerging with a deal to acquire its Type 1 diabetes partner Sigilon Therapeutics for $34.6 million upfront. The value of the deal could balloon if the biotech passes milestones from a first-in-human trial through to authorization in a major market.
Sigilon hit the rocks in 2021. That year, the FDA put the biotech’s early-phase hemophilia A clinical trial on hold, ultimately leading to the termination of the program and a round of layoffs. Shorn of its lead program, Sigilon focused its encapsulated cell therapy capabilities on the rare lysosomal disease MPS-1 and its Lilly-partnered diabetes project.
Investor enthusiasm waned, culminating in the biotech having a sub-$10 million market cap before news of the Lilly deal broke. Sigilon’s decline has enabled Lilly to buy its partner for $14.92 per share in cash, a figure that represents an almost 300% premium but still only amounts to a $34.6 million upfront payment.
The bigger paydays are linked to non-tradable contingent value rights tied to three milestones. Sigilon shareholders will receive $4.06 per share “upon first dosing of a specified product in the first human clinical trial,” $26.39 per share when the product enters a registrational trial and $81.19 per share if the product wins approval. The milestones could swell the size of the deal to $309.6 million.
In return, Lilly will gain control of SIG-002, the partnered Type 1 diabetes program. Lilly teamed up with Sigilon to develop the cell therapy in 2018, paying $63 million and committing up to $410 million in milestones for an exclusive global license. The resulting candidate is set to start IND-enabling studies in the second half of the year.
SIG-002 is designed to replace the islet cells that are at the root of Type 1 diabetes, a condition driven by immune attacks on insulin-producing beta cells within the endocrine islets of the pancreas. Insulin drugs can compensate for the lack of beta cells but put compliance burdens on patients, leading companies such as Vertex, which recently posted phase 1 data, and Lilly to identify cell therapies as a lasting fix.