Why Eli Lilly (LLY) Is Buying Prevail Therapeutics (PRVL) For Up To $1.04 Billion

By Amit Chowdhry ● December 18, 2020
  • This week, Eli Lilly and Company (NYSE: LLY) and Prevail Therapeutics Inc. (NASDAQ: PRVL) announced a definitive agreement for Lilly to acquire Prevail for up to $1.04 billion. These are the details.

This week, Eli Lilly and Company (NYSE: LLY) and Prevail Therapeutics Inc. (NASDAQ: PRVL) announced a definitive agreement for Lilly to acquire Prevail for $22.50 per share in cash (or an aggregate of approximately $880 million) — which is payable at closing plus one non-tradable contingent value right worth up to $4.00 per share in cash (or an aggregate of approximately $160 million) for a total consideration of up to $26.50 per share in cash (or an aggregate of approximately $1.040 billion).

The contingent value right is subject to certain terms and conditions upon the first regulatory approval of a product from Prevail’s pipeline. Prevail is known as a biotechnology company developing potentially disease-modifying AAV9-based gene therapies for patients with neurodegenerative diseases.

And the acquisition will establish a new modality for drug discovery and development at Lilly, extending Lilly’s research efforts through the creation of a gene therapy program that will be anchored by Prevail’s portfolio of clinical-stage and preclinical neuroscience assets. 

Prevail’s lead gene therapies in clinical development include PR001 for patients with Parkinson’s disease with GBA1 mutations (PD-GBA) and neuronopathic Gaucher disease (nGD) and PR006 for patients with frontotemporal dementia with GRN mutations (FTD-GRN). And Prevail’s preclinical pipeline includes PR004 for patients with specific synucleinopathies, as well as potential gene therapies for Alzheimer’s disease, Parkinson’s disease, amyotrophic lateral sclerosis (ALS), and other neurodegenerative disorders.

The purchase price payable at closing represents a premium of approximately 117% to the 60-day volume-weighted average trading price of Prevail’s common stock ended on December 14, 2020, which is the last trading day before the announcement of the transaction. Prevail’s Board of Directors unanimously recommends that Prevail’s stockholders tender their shares in the tender offer. And certain Prevail stockholders, beneficially owning approximately 51% of Prevail’s outstanding common stock have agreed to tender their shares in the tender offer.

Upon the closing, the impact of this transaction will be reflected in Lilly’s 2021 financial results according to GAAP. And there will be no change required to Lilly’s 2021 financial guidance for research and development expense or non-GAAP earnings per share as a result of this transaction.

For Lilly, Lazard is acting as sole financial advisor and Weil, Gotshal & Manges LLP is acting as legal counsel. And for Prevail, Centerview Partners LLC is acting as sole financial advisor, Ropes & Gray LLP is acting as legal counsel, and Cooley LLP also provided legal counsel..

Prevail Therapeutics’ Pipeline

PR001 is being developed as a potentially disease-modifying and single-dose AAV9-based gene therapy for patients with Parkinson’s disease with GBA1 mutations (PD-GBA) and neuronopathic Gaucher disease (nGD), delivered by intra-cisterna magna injection. And the PROPEL trial, a Phase 1/2 clinical trial of PR001 for the treatment of PD-GBA patients is ongoing. 

The PROVIDE trial — which is a Phase 1/2 clinical trial of PR001 for the treatment of Type 2 Gaucher disease patients — is now recruiting. The U.S. Food and Drug Administration (FDA) has granted Fast Track Designation for PR001 for the treatment of PD-GBA and for the treatment of nGD. And it has also granted Orphan Drug Designation for PR001 for the treatment of Gaucher disease, and Rare Pediatric Disease Designation for the treatment of nGD.

PR006 is being developed as a potentially disease-modifying and single-dose AAV9-based gene therapy for patients with frontotemporal dementia with GRN mutations (FTD-GRN) — which is also delivered by intra-cisterna magna injection. And the PROCLAIM trial, a Phase 1/2 clinical trial of PR006 for the treatment of FTD-GRN patients, is currently ongoing and the first patient was dosed in December 2020. The FDA and the European Commission have granted orphan designation for PR006 for the treatment of FTD, and the FDA has granted Fast Track Designation for PR006 for FTD-GRN.

PR004 is a gene therapy for preclinical development for patients with certain synucleinopathies. And PR004 utilizes an AAV9 vector to deliver the GBA1 gene — which encodes glucocerebrosidase (GCase) and a molecule that suppresses expression of α-Synuclein.

Prevail is also developing a broad pipeline of additional AAV gene therapies for the treatment of Alzheimer’s disease, ALS, Parkinson’s disease, and other neurodegenerative disorders. And preclinical development of these potential therapies is currently ongoing.

Prevail was originally founded by Dr. Asa Abeliovich in 2017 through a collaborative effort with The Silverstein Foundation for Parkinson’s with GBA and OrbiMed.

KEY QUOTES:

“Gene therapy is a promising approach with the potential to deliver transformative treatments for patients with neurodegenerative diseases such as Parkinson’s, Gaucher and dementia. The acquisition of Prevail will bring critical technology and highly skilled teams to complement our existing expertise at Lilly, as we build a new gene therapy program anchored by well-researched assets. We look forward to completing the proposed acquisition and working with Prevail to advance their groundbreaking work through clinical development.”

— Mark Mintun, M.D., vice president of pain and neurodegeneration research at Lilly

“Lilly is an established leader in neuroscience drug development and commercialization who shares our commitment to patients with neurodegenerative diseases, and I’m excited for Prevail to join the Lilly family. I’m incredibly proud of the Prevail team, who have made great progress advancing our pipeline of gene therapy programs for patients with these devastating disorders. In just over three years, Prevail has advanced two first-in-class gene therapy programs into clinical development for PD-GBA, nGD, and FTD-GRN, established two manufacturing platforms, and developed a broad pipeline with great potential to impact patients in need of disease-modifying treatment options.  With its global scale and resources, Lilly will be the ideal organization to maximize the potential of our pipeline and accelerate our ability to bring these therapies to as many patients as possible. We look forward to working together to advance our shared mission.”

— Asa Abeliovich, M.D., Ph.D., founder and chief executive officer of Prevail