Eli Lilly strengthening its Gastroenterology portfolio post Acquisition of Morphic. Tracking competitors and alliances in inflammatory bowel disease (IBD).

In a strategic move aimed at bolstering its portfolio in inflammatory bowel disease (IBD) treatments, Eli Lilly and Company has announced a definitive agreement to acquire Morphic Holding for approximately USD 3.2 billion. The purchase price represents a 79% premium to Morphic’s closing stock price. Post the tender offer, any remaining shares will be acquired through a second-step merger at the same price. This acquisition, slated to close in the third quarter of 2024 pending regulatory approvals, underscores Lilly’s enduring commitment to pioneering therapies in the field of gastroenterology.

Through the deal, Lilly will procure an experimental oral IBD treatment, tapping into a growing trend towards more patient-friendly treatment options. Along with Lilly, other drug makers such as Abbvie, Pfizer, and Johnson & Johnson are also jostling for a share of the bowel disease market.

IBD collectively refers to two conditions – Crohn’s disease and Ulcerative colitis– characterized by chronic inflammation of the gastrointestinal tract. Treatment typically involves either surgery or drug therapy, including anti-inflammatory drugs, immune system suppressors, biologics, antibiotics, pain relievers, vitamins, and nutritional support.

What’s more to the IBD landscape?

The latter half of 2023 saw several landmark FDA approvals for gastroenterology and hepatology, particularly in the treatment of ulcerative colitis, with four new options squeezing into an already saturated market.

Within the last few months, the agency has approved several “first and only” ulcerative colitis therapies, including AbbVie’s SKYRIZI (risankizumab), a IL-23 specific inhibitor, Eli Lilly’s trailblazing IL-23p19 inhibitor, OMVOH (mirikizumab), Pfizer’s VELSIPITY (etrasimod) as a second S1P receptor modulator and two subcutaneous formulation offerings: Takeda Pharmaceuticals’ ENTYVIO (vedolizumab) and Celltrion’s ZYMFENTRA (infliximab-dyyb). With these newly approved therapies battling for market share against established heavyweights like Janssen’s STELARA (ustekinumab), AbbVie’s HUMIRA (adalimumab) and Pfizer’s XELJANZ (tofacitinib), the stage is set for a shake-up in the ulcerative colitis treatment landscape going forward.

In the realm of Crohn’s disease treatment, the biologics market has been predominantly led by anti-TNF agents, particularly HUMIRA and REMICADE, however classes such as anti-integrin and interleukin inhibitor are making inroads into the market owing to a better clinical profile (i.e. no black box warnings) and convenient dosing.

Unveiling the Core Asset, MORF-057. Why was it acquired?

Central to this acquisition is Morphic’s flagship program, MORF-057, a selective oral small molecule inhibitor of α4β7 integrin tailored for treating IBD. Currently, the drug is being evaluated in two Phase II studies for ulcerative colitis and one Phase II study for Crohn’s disease. As of April 2024, Morphic was enrolling patients in the Phase IIb EMERALD-2 trial for ulcerative colitis and anticipated dosing the first patient in the Phase II GARNET trial for Crohn’s disease by the second quarter of 2024. Further details on these studies are expected to be disclosed in Morphic’s second quarter results.

MORF-057 stands as a promising candidate, with the potential to challenge Takeda’s ENTYVIO. While Entyvio, requires injection, MORF-057 offers the convenience of an oral treatment. This distinction positions MORF-057 as a strong competitor in the market. In 2023, ENTYVIO achieved blockbuster global sales of roughly USD 5 billion, reflecting its strong commercial uptake post approval of its subcutaneous version.

Beyond MORF-057, Morphic brings to Lilly a robust pipeline encompassing treatments for autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases, and cancer. This diverse portfolio aligns with Lilly’s strategic focus on expanding its footprint in immunology and inflammation.

Alliances that took place last year in 2023

In 2023, several significant deals occurred in the pharmaceutical industry focused on treatments for IBD. Few of the notable deals include:

• Teva Pharmaceuticals and Sanofi: Collaborated to develop and commercialize TEV-48574, an anti-TL1A treatment for Ulcerative Colitis and Crohn’s disease.
• Eli Lilly and Versanis Bio: Acquired Versanis Bio for up to USD 1.925 billion, expanding Lilly’s portfolio in chronic disease treatments, including promising therapies for IBD.
• Takeda Pharmaceutical and Nimbus Therapeutics: Acquired Nimbus Therapeutics’ TYK2 inhibitor program for up to USD 6 billion, enhancing Takeda’s immunology pipeline.
• Merck’s and Prometheus Biosciences: Acquired Prometheus Biosciences for USD 10.8 billion, focusing on Prometheus’ lead drug candidate, PRA023, targeting the TL1A pathway for treating both Crohn’s disease and Ulcerative Colitis.

These deals reflect the growing interest in novel IBD therapies, particularly those targeting specific inflammatory pathways like TL1A, highlighting the competitive and evolving nature of the market.

Glimpse of Upcoming Entrants in IBD Market

Potential late stage key competitors in the space include: