Eli Lilly and Company and Scorpion Therapeutics a private biotechnology company specializing in small molecule precision oncology therapies, have announced a definitive agreement for Lilly to acquire Scorpion’s PI3Kα inhibitor program, STX-478. This cutting-edge compound is a once-daily oral, mutant-selective PI3Kα inhibitor currently undergoing evaluation in a Phase 1/2 clinical trial for breast cancer and other advanced solid tumors.
The acquisition represents a significant advancement in Lilly’s oncology portfolio and underscores its commitment to addressing unmet medical needs in cancer treatment. STX-478 holds the potential to revolutionize PI3Kα-targeting therapies by offering a selective approach that impacts cancerous cells while sparing healthy ones. This differentiation addresses a critical limitation of existing medicines targeting the PI3Kα pathway, which often result in undesirable side effects and limited therapeutic efficacy.
A Breakthrough in PI3Kα-Targeting Therapies
STX-478 is designed to selectively target PI3Kα mutations, which occur in a significant proportion of hormone-positive breast cancers. These mutations activate the PI3Kα pathway, driving tumor growth and progression. By precisely inhibiting this pathway in cancer cells while sparing healthy tissues, STX-478 offers the potential for deeper and more sustained pathway inhibition. This, in turn, could lead to improved disease control and enhanced tolerability for patients.
“PI3Kα mutations occur in a meaningful proportion of hormone-positive breast cancers, and there is significant unmet need for new treatment options that effectively and safely target this pathway,” said Jacob Van Naarden, executive vice president and president of Lilly Oncology. “The selectivity profile of STX-478 has led to a differentiated clinical profile, enabling use in combination with standard-of-care therapies. This has the potential to deliver meaningful impact in earlier treatment settings where there is the best opportunity to improve outcomes for patients. We look forward to leveraging the great work of the Scorpion team, along with Lilly’s deep expertise in breast cancer, to advance STX-478 with speed and focus.”
Transaction Details
Under the terms of the agreement, Lilly will acquire Scorpion and its PI3Kα program for up to $2.5 billion in cash. This includes an upfront payment and subsequent payments tied to the achievement of specific regulatory and sales milestones. Additionally, as part of the transaction, Scorpion will spin out a new independent entity to retain its employees and non-PI3Kα pipeline assets. This new company will be owned by Scorpion’s current shareholders, with Lilly maintaining a minority equity interest.
The spin-out company will be led by Adam Friedman, M.D., Ph.D., president and chief executive officer of Scorpion, and other members of the current Scorpion management team. It will focus on advancing a robust pipeline of precision medicines accelerated by Scorpion’s drug discovery capabilities.
“Lilly has advanced scientific breakthroughs for some of the most difficult-to-treat cancers,” said Dr. Friedman. “We believe Lilly’s global capabilities and strategic commitment to patients with breast cancer will accelerate our goal of developing STX-478 to improve outcomes for the many patients with solid tumors driven by PI3Kα mutations. This acquisition is a testament to the expertise of the Scorpion team and our drug discovery capabilities, which will serve as the foundation of our new company.”
Strategic Rationale
The acquisition of Scorpion’s PI3Kα program aligns with Lilly’s strategy of investing in transformative oncology therapies. Hormone-positive breast cancer remains a significant clinical challenge, with limited effective treatments available for patients with PI3Kα mutations. By integrating STX-478 into its pipeline, Lilly aims to expand its portfolio of targeted therapies and address critical gaps in cancer treatment.
Lilly’s expertise in breast cancer and its established global infrastructure will play a pivotal role in advancing STX-478. The company plans to accelerate the development of this promising therapy through rigorous clinical trials, with a focus on early treatment settings where the potential for improved patient outcomes is highest.
Additionally, the acquisition underscores Lilly’s broader commitment to precision oncology, which aims to deliver tailored therapies that address the unique molecular drivers of cancer. The selective targeting mechanism of STX-478 exemplifies this approach and holds promise for improving the standard of care in oncology.
Financial Considerations
The total transaction value of up to $2.5 billion reflects the high potential of Scorpion’s PI3Kα program. This includes an upfront payment and milestone-based payments contingent on regulatory approvals and commercial success. The financial structure of the deal provides incentives for achieving key development and sales milestones, aligning the interests of both parties.
Lilly’s minority equity stake in the new spin-out company ensures continued collaboration and alignment with Scorpion’s ongoing efforts in precision medicine. The spin-out company will leverage Scorpion’s discovery platform and non-PI3Kα pipeline assets to develop innovative therapies for a range of unmet medical needs.
The transaction is subject to customary closing conditions, including regulatory approvals. Upon closing, Lilly will determine the accounting treatment in accordance with Generally Accepted Accounting Principles (GAAP). The financial implications of the transaction will be reflected in Lilly’s financial results and guidance.
Expert Collaboration and Support
For Lilly, Citi is acting as the exclusive financial advisor, while Ropes & Gray LLP is providing legal counsel. Scorpion has engaged Centerview Partners LLC as its lead financial advisor, with additional advisory support from Morgan Stanley. Legal counsel for Scorpion is being provided by Kirkland & Ellis LLP.
Implications for Patients and the Industry
The acquisition of Scorpion’s PI3Kα program represents a significant step forward in precision oncology. By focusing on targeted therapies that selectively impact cancer cells, Lilly aims to improve outcomes for patients with breast cancer and other solid tumors. The differentiated clinical profile of STX-478 positions it as a promising candidate for combination therapies, which could further enhance its therapeutic potential.
For the biotechnology industry, the transaction highlights the growing importance of precision medicine and the value of innovative drug discovery platforms. Scorpion’s approach to developing selective inhibitors exemplifies the shift toward therapies that offer both efficacy and improved tolerability. The spin-out company’s continued focus on discovery and development will contribute to the advancement of precision medicine and maintain Scorpion’s legacy of innovation.
