Lilly to buy three vaccine developers for up to $3.8 billion

Eli Lilly & Co. is buying three clinical-stage vaccine developers for as much as $3.8 billion, leveraging its obesity-fueled dominance to establish itself as a leader in other areas and become a major player in infectious diseases.

The agreements with Curevo, LimmaTech Biologics and Vaccine Company give Lilly access to novel technology and experimental immunizations for shingles, common bacterial pathogens and Epstein-Barr Virus, according to a statement on Tuesday.

“These acquisitions reflect a deliberate strategy to prevent disease at its source rather than treat its consequences,” Dan Skovronsky, Lilly’s chief scientific and product officer, said in a statement.

The drugmaker, flush with cash from its blockbuster obesity drugs, has been expanding into other disease areas as it builds out its pipeline beyond weight loss. The acquisitions come at a precarious time for vaccines, which have lost US government funding and support under Health Secretary Robert F. Kennedy Jr.

Lilly’s shares rose less than 1% at 9:35 a.m. in New York.

The company signaled a renewed interest in targeting infectious disease last year when it hired former Food and Drug Administration official Peter Marks to oversee its work in the area. While it has a long history in the space, mass producing penicillin in the 1940s and distributing the Salk Polio Vaccine, the drugmaker has largely focused on other areas in the intervening decades.

“Strategically, the trio of acquisitions is consistent with the Marks hire and signals Lilly’s intent to be a vaccine innovator,” said David Risinger, an analyst at Leerink Partners.

Now, the trio of acquisitions gives Lilly promising technologies to attack a variety of global health problems. In a deal worth as much as $1.5 billion, it will gain Curevo’s lead product, called amezosvatein, for the prevention of shingles in adults. It could pose a challenge to GSK Plc’s Shingrix.

The purchase of LimmaTech Biologics, for as much as $780 million in cash, will allow Lilly to target bacterial pathogens that cause staph infections, gonorrhea and chlamydia. Its lead program, LTB-SA7, is in early-stage studies to protect against a bacteria that’s a primary cause of surgical-site infection. There are also several early programs targeting bacterial pathogens that cause infertility and other infections that disproportionately affect women, Lilly said.

The final buyout of Vaccine Company, worth as much as $1.55 billion in cash, gives Lilly a proprietary vaccine platform that targets a broad set of pathogens. Its lead program for Epstein-Barr Virus is ready for early-stage trials, Lilly said.

The deals, which include upfront cash and future payments if milestones are met, were first reported by the Wall Street Journal.