Lilly to buy gene therapy firm Prevail for $1 billion

US pharma major Eli Lilly (NYSE: LLY) yesterday revealed that it has signed an agreement to acquire gene therapy company Prevail Therapeutics (Nasdaq: PRVL), with the news sending the latter’s shares roaring up 86% pre-market.

Lilly has agreed to pay $22.50 per Prevail share in cash (or an aggregate of around $880 million) payable at closing plus one non-tradable contingent value right (CVR) worth up to $4.00 per share in cash (or an aggregate of about $160 million), for a total consideration of up to $26.50 per share in cash (or an aggregate of about $1.040 billion). Lilly’s shares also gained 2%, but that was most likely due to it raising its financial outlook (see below).

The CVR is payable (subject to certain terms and conditions) upon the first regulatory approval of a product from Prevail's pipeline as set forth in more detail below. Prevail is a biotechnology company developing potentially disease-modifying AAV9-based gene therapies for patients with neurodegenerative diseases. The transaction is expected to close in the first quarter of 2021