Eli Lilly Slips as It Buys Merida Biosciences in a $2.9 Billion Autoimmune Deal

Eli Lilly shares eased in early-afternoon trading Monday, down about 1.6% to $1,156, after the drugmaker said it would buy privately held Merida Biosciences for up to $2.88 billion in cash and extend its reach into autoimmune and allergic disease. The stock traded between $1,147 and $1,171 through the session, having closed Friday at $1,174.61. The reaction was muted. The broader market was lower as well, with rising oil prices and firmer bets on a hawkish Federal Reserve weighing on stocks.

A cash deal built on antibody engineering

Under the agreement announced Monday, Lilly will pay an upfront sum plus milestone payments totaling up to $2.875 billion, according to the company. All of it is cash. Lilly did not break out how much is paid upfront versus tied to milestones, and it expects the transaction to close in the fourth quarter of 2026.

Merida develops precision biologics designed to selectively degrade disease-causing autoantibodies while leaving normal immune function intact. Its lead program, MER511, targets the thyroid-stimulating immunoglobulins behind Graves’ disease and thyroid eye disease, and it is in Phase 1 testing for both. A second candidate, MER769, is preclinical and aimed at food allergy, asthma and chronic spontaneous urticaria, with earlier-stage work in kidney and other immune-mediated conditions. Each of these conditions traces to the immune system attacking the body’s own tissue, the target Merida’s platform is built to address.

Francisco Ramírez-Valle, Lilly’s senior vice president of immunology, said the company is building its pipeline around therapies that “meaningfully change the course of disease.” None of Merida’s programs has reached late-stage trials, so the value beyond the upfront payment hinges on clinical milestones that are years away.

A year of deals beyond the obesity franchise

The Merida purchase lands in the middle of an active stretch of dealmaking. Lilly’s acquisition spending in 2026 has outpaced prior years, Reuters reported, as the company channels profits from its obesity and diabetes drugs, led by Mounjaro and Zepbound, into a wider pipeline. Leerink Partners analyst David Risinger called the deal “further evidence of management’s intent to diversify Lilly’s pipeline beyond obesity.”

That framing helps explain the quiet reaction. The deal is small against Lilly’s market value above $1 trillion, and it does not touch the incretin drugs that drive the company’s growth. Investors read it as a pipeline addition rather than a catalyst for the core business.

The stock came into Monday well off its lows. Lilly has climbed 26% over the past three months and 3% over the past month, though it sits about 10% below its 90-day high of $1,280. Its 52-week range runs from $623.78 to $1,292.65, a spread that captures both last year’s slide and this year’s recovery.

What to watch

The deal still needs regulatory clearance. It is expected to close in the fourth quarter, subject to customary conditions. Investors will look for whether Lilly keeps adding immunology assets at this pace, and for early clinical readouts from MER511 as it moves through Phase 1. Monday’s close will show whether the morning decline holds into the afternoon.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.