Eli Lilly to buy gene therapy company Akouos for $487 million

Besides the acquisition value of approximately $487 million, the transaction includes a contingent value right for an aggregate amount of up to approximately $610 million.

Eli Lilly and Akouos last week signed a definitive agreement for Lilly to acquire Akouos, a precision genetic medicine company that is developing a portfolio of first-in-class adeno-associated viral gene therapies for the treatment of inner ear conditions, including sensorineural hearing loss.

The proposed acquisition will accelerate gene therapies that aim to restore, improve, and preserve hearing for patients living with disabling hearing loss worldwide, the company stated in a release

"We are honored to work with the talented team at Akouos who are breaking new ground in the science of treating hearing loss," said Andrew C Adams, senior vice president of genetic medicine and co-director of the Institute for Genetic Medicine, Lilly. "We believe that with Lilly's resources, global reach, and growing capabilities in gene therapy, we can help Akouos fulfill their mission of making healthy hearing available to all."

Akouos has integrated expertise across otology, inner ear drug delivery, and gene therapy with the goal of addressing the needs of people living with disabling hearing loss worldwide. Akouos's lead product candidate, AK-OTOF, is a gene therapy for the treatment of hearing loss due to mutations in the otoferlin gene (OTOF). Additional pipeline programmes span across multiple inner ear conditions, and include AK-CLRN1 for Usher Type 3A, an autosomal recessive disorder characterized by progressive loss of both hearing and vision; GJB2 (which encodes connexin 26) for a common form of monogenic deafness and hearing loss; and AK-antiVEGF for the treatment of vestibular schwannoma.

"I am proud of the commitment and passion of our team, which has established Akouos as a pioneer in inner ear genetic medicine, as demonstrated by our work to advance the first investigational therapy for a genetic form of hearing loss into clinical development," said Emmanuel Simons, co-founder, president, and chief executive officer of Akouos. "Joining Lilly – a company that shares our purpose to make life better for people around the world – will help us accelerate the development of a broad pipeline of inner ear genetic medicines."  

Under the terms of the transaction, Lilly will acquire all of the outstanding shares of Akouos for $12.50 per share in cash, plus one contingent value right (CVR) of up to $3.00 per share. The deal has been approved by the boards of directors of both companies.

Lilly will commence a tender offer to acquire all outstanding shares of Akouos for a purchase price of $12.50 per share in cash (an aggregate of approximately $487 million) payable at closing plus one non-tradeable contingent value right per share (CVR) that entitles the holder to receive up to an additional $3.00 in cash, for a total consideration of up to $15.50 per share in cash without interest (an aggregate of up to approximately $610 million).

CVR holders would become entitled to receive contingent payments as follows: (i) $1.00 in cash, upon the fifth (5th) participant being administered with AK-OTOF in a Phase 1 or Phase 1/2 trial on or prior to 31 December 2024; $1.00 in cash upon the fifth participant being administered with an Akouos gene therapy product for a second monogenic form of sensorineural hearing loss (excluding AK-OTOF and AK-antiVEGF) on or prior to 31 December 2026; and $1.00 in cash, upon the first participant being administered with an Akouos gene therapy product (excluding AK-antiVEGF) for a monogenic form of sensorineural hearing loss in a Phase 3 trial, or receipt of FDA approval in the US for such Akouos product, whichever occures first, on or prior to 31 December 2026, or its value will be reduced by approximately 4.2 cents per month until 1 December 2028 (at which point the CVR will expire).

Wli Lilly said there can be no assurance that any payments will be made with respect to the CVR. The transaction is not subject to any financing condition and is expected to close in the fourth quarter of 2022, subject to customary closing conditions, including receipt of required antitrust clearance and the tender of a majority of the outstanding shares of Akouos's common stock. 

Following the successful closing of the tender offer, Lilly will acquire any shares of Akouos that are not tendered in the tender offer through a second-step merger at the same consideration as paid in the tender offer.

The purchase price payable at closing represents a premium of approximately 121 per cent to the 30-day volume-weighted average trading price of Akouos's common stock ended on 17 October 2022, the last trading day before the announcement of the transaction.