American drugmaker Eli Lilly buys biotech company SGX Pharma for $64 million

09 July 2008

Drug developer Eli Lilly and Co will buy San Diego-based biotech company SGX Pharmaceuticals for about $64 million in cash in an effort to expand its drug discovery efforts, the companies said yesterday.

Under the terms of the agreement, Lilly will acquire all of the outstanding shares of SGX common stock at a price of $3 per share, for a total purchase price of approximately $64 million.

This marks a 100 per cent plus premium on the latter's closing price of $1.37 on Monday. Consequently, post announcement, SGX shares quickly jumped in after-hours trading, soaring to $2.87. In comparison, shares of Eli Lilly rose $2.25, or 4.9 per cent, to close at $48.46.

The acquisition will allow Lilly to integrate SGX's structure-guided drug discovery platform into its drug discovery efforts. It will also give Lilly access to Fast, SGX's fragment-based, protein structure guided drug discovery technology, and to a portfolio of preclinical oncology compounds focused on a number of high-value kinase targets.

The ongoing collaboration also provides Lilly with access to the SGX synchrotron beamline facility, SGX-Cat, which is a synchrotron facility enabling X-ray crystallography and protein structure determination built by SGX at the advanced photon source located at the Department of Energy's Argonne National Laboratory in Chicago, Illinois.

"We will leverage the combined resources of both companies to strengthen our structural biology capabilities and seek out innovative therapies for patients," said Steven M Paul, executive vice president of science and technology for Eli Lilly, in a statement.