Prevail Therapeutics surges 86% on news of a $1 billion buyout by Eli Lilly

• Prevail Therapeutics rallied as much as 86% in early Tuesday trading after Eli Lilly announced it will buy the firm for up to $1 billion.
• The pharmaceutical giant will pay $22.50 per share for Prevail. A non-tradable contingent value right can be worth up to an additional $4 per share and hinges on a Prevail product winning regulatory approval.
• The acquisition is expected to close in the first quarter of 2021, according to a press release.
• Prevail's gene therapy programs target patients with Parkinson's disease, frontotemporal dementia, and other neurodegenerative diseases.
• Watch Prevail Therapeutics trade live here.

Prevail Therapeutics soared as much as 86% in early Tuesday trading after pharmaceutical giant Eli Lilly announced plans to purchase the gene therapy firm.

The deal leaves Eli Lilly to pay $22.50 per share as well as one non-tradable contingent value right worth up to $4 per share for Prevail. The contingent value right is to be paid upon the first regulatory approval of a Prevail product, according to a press release.

Should the additional payment reach the $4-per-share maximum, Eli Lilly's acquisition will value Prevail at roughly $1 billion. The transaction is expected to close in the first quarter of 2021.

Prevail shares closed at $12.50 on Monday. Eli Lilly climbed as much as 2.4% in early trading.

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Prevail's gene therapy programs offer a new pathway for drug discovery and development to Eli Lilly, the pharma company said. The leading programs target patients with Parkinson's disease, neuronopathic Gaucher disease, and frontotemporal dementia. Its preclinical pipeline includes therapies for Alzheimer's disease, amyotrophic lateral sclerosis, and other neurodegenerative diseases.

Eli Lilly also revealed improved guidance for the full year and 2021. Strong demand for its products is expected to drive annual sales between $24.2 billion and $24.7 billion, according to a regulatory filing. Revenue is expected to land between $26.5 billion and $28 billion in 2021. Earnings per share are projected to be between $6.28 and $6.48 this year, and between $7.25 and $7.90 in 2021.

Lazard will serve as Eli Lilly's sole financial advisor for the acquisition. Centerview Partners will be Prevail's financial advisor.

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