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Eli Lilly: Acquisition of Dice Therapeutics Yields Midstage Oral Psoriasis Drug at a Fair Price

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Securities In This Article
Amgen Inc
(AMGN)
Bristol-Myers Squibb Co
(BMY)
Eli Lilly and Co
(LLY)

Eli Lilly’s LLY announced acquisition of Dice Therapeutics DICE for $2.4 billion doesn’t have a major impact on the company’s fair value estimate or wide moat rating largely due to the smaller size of the deal. However, the planned acquisition will provide Lilly with an interesting midstage oral IL-17 drug (DC-806) for psoriasis. In a phase 1 study, DC-806 supported a 44% reduction in psoriasis (as measured by the Psoriasis Area and Severity Index, or PASI, score) in the high dose group. Importantly, the drug didn’t appear to cause any major safety issues. While the study was small, with fewer than 50 patients, the early-stage data is encouraging. With injectable drugs targeting IL-17 for psoriasis gaining over $6 billion annually and the overall psoriasis market holding over $40 billion in annual sales potential, DC-806 could be a major drug if later-stage studies are successful. We expect phase 2 psoriasis data for DC-806 in mid-2024, which should provide a better perspective on the true potential of the drug. The oral convenience of the drug could be a differentiator as most psoriasis drugs are injectable. Also, the drug’s mechanism of action differs from the oral psoriasis drugs from Amgen AMGN (Otezla) and Bristol BMY (Sotyktu), which provides a unique potential for Eli Lilly.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Damien Conover, CFA

Sector Director
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Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

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