2 days ago
BMO downgrades Verve Therapeutics saying Lilly buyout deal caps upside
-- BMO Capital Markets downgraded Verve Therapeutics to Market perform, saying Eli Lilly's agreement to buy the gene-editing specialist leaves limited room for the stock to rise before the transaction is expected to close in the third quarter of 2025.
Lilly said on June 17 it would pay $10.50 in cash for each Verve share and up to another $3 through a contingent value right tied to a future Phase III trial of Verve's PCSK9-targeting therapy, valuing the deal at as much as $1.3 billion.
BMO set its price target at $13.50, matching the total potential payout, and said it sees about a 70% chance that investors will receive the extra payment once the late-stage study begins, which the brokerage projects could happen by 2028.
The brokerage said its downgrade reflects 'the definitive agreement to acquire VERV,' noting that Lilly's tender offer expires on July 23 and U.S. antitrust review is slated to end two days later. 'We expect a smooth deal closure by 3Q25 given LLY/VERV extensive relationship/partnership,' the analysts wrote.
BMO said it will watch for 0.7 mg/kg dose data from an ongoing Phase Ib test of lead drug VERVE-102, where it models a 61–65% reduction in LDL cholesterol. Still, with Verve's trading at $11.25 in Friday premarket trading, already above Lilly's upfront offer, the brokerage sees little near-term upside.
Verve's stock has more than doubled since Lilly announced the takeover, while Lilly's shares have dipped slightly.
BMO added that the value of the CVR 'captures sufficient' risk around whether Verve can advance multiple late-stage trials and that the deal provides investors with a clearer timetable for any additional returns beyond the cash component.
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