Eli Lilly and Company and Applied Molecular Evolution, Inc. announced the companies have mutually agreed to AME's merger into Lilly. The boards of directors of Lilly and AME have given their approval to the transaction, which is subject to approval of AME shareholders, clearance under the Hart-Scott-Rodino Anti-Trust Improvements Act and certain other closing conditions.
"We believe that the combination of Lilly's therapeutic area discovery and medical expertise and AME's industry-leading protein optimization technology will enhance our stature as a world leader in biotechnology products," said Steven M Paul, MD, executive vice president, science and technology for Lilly. "We are confident that the synergies this merger creates will accelerate our ability to discover and optimize biotherapeutic drugs for cancer, inflammatory diseases, and critical care, as well as diabetes and obesity - areas where proteins, such as monoclonal antibodies, are of great therapeutic benefit. We have already seen the advantages of AME's technology firsthand through our two-year collaboration, and we look forward to leveraging AME's expertise across all of our therapeutic areas."
"Lilly is an ideal strategic fit for AME. Our combination with Lilly will leverage the protein therapeutic optimization and development capabilities that we have created and provides a very substantial return over the past year to our shareholders," said William D Huse, MD, PhD, chief executive officer and chairman for AME. "Based on our extensive collaborative experience with Lilly, we believe that AME's world-class protein engineering and development team coupled with Lilly's drug discovery, medical expertise and resources will enable the full potential of AME's directed evolution technology to be realized."
AME, located in San Diego, will retain its name but become a wholly owned subsidiary of Lilly and integrate with Lilly's research organization.
Under the terms of the agreement, AME shareholders will receive $18 for each outstanding AME share at closing. AME shareholders may elect to receive the $18 in cash or shares of Lilly common stock based on the closing price of Lilly stock on the closing date, subject to proration such that the total purchase price paid by Lilly is 80 per cent stock and 20 per cent cash. The value of the transaction as of the anticipated closing date is expected to be approximately $400 million, net of cash.
The transaction is expected to close in the first quarter of 2004. Acquired in-process research and development related to this transaction will be reported by Lilly as a substantial one-time charge in 2004. Excluding this one-time charge, there is no material dilutive impact to Lilly's 2004 earnings.