He wanted a deal. Lilly wanted a partnership. Could Sigilon make it any more obvious?

He wanted a deal. Lilly wanted a partnership. Could Sigilon make it any more obvious?

Sigilon Therapeutics really wanted to be bought by Eli Lilly. That much is clear in Securites and Exchange Commission documents filed Thursday that provide a peek behind the scenes at the deal-making process.

It turns out Sigilon had been hoping for a deal as far back as December 2021, when, after three years of working together, the biotech was looking for strategic alternatives, according to the documents (PDF). Lilly said no thanks at that time—but Sigilon CEO Rogerio Vivaldi was dogged in his pursuit of a sale.

Less than a year later in September 2022, Sigilon’s leadership again raised the prospect of a deal, which Lilly initially turned down again. But the pharma expressed interest in perhaps discussing some of Sigilon’s assets and programs. Midway through the month, Lilly cracked open a window, suggesting that a deal could be possible as long as the transaction was only a small premium to Sigilon’s trading price or the amount of cash on the biotech’s balance sheet.

On Nov. 1, 2022, Lilly pulled the window shut again, saying that the original Sigilon partnership was going just fine.

Lilly kept in touch, and in April 2023 was ready to consider a deal for Sigilon’s assets. The biotech’s advisors then held a teleconference with Lilly in May, stressing the continuity and simplicity of a whole-company transaction, compared to chopping up the biotech for assets. After that meeting, Lilly once again backed off.

Vivaldi continued to reach out to Lilly’s team, encouraging talks about a whole company merger. Finally, in May, the efforts broke through and Lilly promised a written offer. The initial suggestion was $40 million minus transaction and integration expenses, but with milestones. After some back and forth on the contingent value rights of the deal, Sigilon’s advisers “expressed disappointment.”

Discussions continued during the second half of May and the parties finally landed on the much-coveted deal, with a small upfront fee and big milestones down the road. On June 27, Lilly CEO David Ricks personally signed off on the deal and a day later the merger agreement was executed. The details were announced publicly on June 29.

Sigilon shareholders will receive $4.06 per share “upon first dosing of a specified product in the first human clinical trial,” $26.39 per share when the product enters a registrational trial and $81.19 per share if the product wins approval. The milestones could swell the size of the deal to $309.6 million.

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