Eli Lilly and Company (NYSE: LLY) announced on Friday that it has reached a final agreement to purchase clinical-stage gene therapy startup Adverum Biotechnologies, Inc. (Nasdaq: ADVM), as part of a strategic move to strengthen its genetic medicine pipeline.
Ixo-vec, a novel single-injection gene therapy for the treatment of wet age-related macular degeneration (wAMD), a major cause of blindness in the elderly, is the focus of the acquisition, which could be worth up to $262 million.
The transaction gives Lilly a late-stage asset in the profitable ophthalmology market while giving Adverum, which was facing diminishing cash reserves, a vital financial lifeline.
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The Financial Terms
Lilly will start a tender offer to buy all of the remaining Adverum shares in accordance with the terms of the agreement. Future success is a major factor in the deal structure:
- Adverum stockholders will get $3.56 in cash up front for each share. In comparison to Adverum’s closing stock price of $4.18 on the eve of the announcement, this upfront payment is a discount.
- Contingent Value Right (CVR): Upon reaching certain milestones, shareholders will also receive one non-transferable CVR per share, which entitles them to an extra $8.91 in cash. $1.78 per CVR after Ixo-vec is approved by US regulators in a seven-year period. $7.13 per CVR if Ixo-vec generates more than $1 billion in global net sales annually in the next ten years.
$12.47 per share is the total possible consideration for shareholders. Subject to standard closing conditions, the deal, which has been unanimously approved by Adverum’s board, is anticipated to close in the fourth quarter of 2025.
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Strategic Rationale: A “One and Done” Treatment
Lilly’s purchase represents a sizable wager on Ixo-vec’s capacity to completely transform the field of wAMD treatment. Anti-VEGF medications such as Eylea and Lucentis are administered intravitreally on a regular basis as part of the current standard of care, which is a costly and time-consuming regimen for patients.
Ixo-vec is a “one and done” treatment that is given as a single intravitreal injection in the office. A gene that allows the eye to continuously produce its own anti-VEGF protein is delivered via an adeno-associated virus (AAV) vector, potentially doing away with the need for frequent injections.
The therapy is presently undergoing a Phase 3 (ARTEMIS) trial and has been designated as a PRIME treatment by the European Medicines Agency (EMA) and Fast Track and Regenerative Medicine Advanced Therapy (RMAT) by the U.S. Food and Drug Administration (FDA).
Ixo-vec has the potential to transform wAMD treatment from a paradigm of chronic care with repeated intravitreal injections to a convenient one-time therapy.
We are eager to welcome Adverum colleagues to Lilly and to help accelerate this innovative medicine to patients.
Andrew Adams
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A Lifeline for Adverum
Adverum is at an important turning point with the acquisition. According to the company, its cash reserves are only anticipated to sustain operations through October 2025 and the ensuing wind-down activities.
In order to ensure the program’s continuation as the acquisition closes, Lilly is giving Adverum a secured loan of up to $65 million as part of the agreement to support Ixo-vec’s ongoing clinical trials and registrational activities.
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