Lilly Bets $2.875 Billion on Merida’s Antibody Degrader

Eli Lilly agreed Monday to buy Merida Biosciences for up to $2.875 billion, a Phase 1 bet on drugs that delete rogue antibodies. The Cambridge, Mass., biotech’s lead shot, MER511, is in early testing for Graves’ disease and thyroid eye disease, and Lilly did not split the cash between the upfront fee and later milestones.

The companies want the deal to close in the fourth quarter of 2026, pending clearances. Lilly is paying Phase 1 prices for a tool that is more specific than the IgG-lowering class already in later Graves studies, and years behind eye drugs that already sell.

A $2.875 Billion Check for Phase 1 Data

Lilly and Merida said on Aug. 31 that Lilly will pay up to $2.875 billion in cash, counting an undisclosed upfront sum and contingent milestones. That is the whole published price. There is no breakout of what Merida’s backers get now versus what they get if MER511, or later programs, clear later tests.

Merida left stealth only 16 months earlier. Third Rock Ventures seeded the company in 2022 while founder Dario Gutierrez, Ph.D., was an entrepreneur in residence there. Adam Townsend, a former Apellis Pharmaceuticals chief operating officer, became chief executive in March 2025. The $121 million Series A launch on April 8, 2025, was co-led by Bain Capital Life Sciences, BVF Partners, and Third Rock, with GV and Perceptive Xontogeny Venture Funds in the round.

FROM STEALTH TO LILLY

1. 2022: Third Rock seeds Merida while Gutierrez is in residence at the firm.
2. March 2025: Townsend is named chief executive.
3. April 8, 2025: Merida launches with $121 million and programs in Graves’ disease, allergy, and membranous nephropathy.
4. July 14, 2025: The team presents MER511’s design at the Endocrine Society meeting.
5. December 19, 2025: First-in-human dosing starts in the NEXUS study.
6. August 31, 2026: Lilly announces the buyout, with a fourth-quarter close targeted.

David Risinger, a Leerink Partners analyst, called the purchase further evidence that Lilly’s managers mean to spread the pipeline past obesity. BMO Capital Markets framed it as a fit with earlier business-development buys and a way to widen the immunology list. The public number is still a ceiling on a company whose lead drug has not finished Phase 1.

MER511 Tags Rogue Antibodies for the Liver

Graves’ disease starts when thyroid-stimulating immunoglobulins lock onto the thyroid-stimulating hormone receptor and push the gland to pour out hormone. Those same antibodies can hit tissue behind the eyes and cause thyroid eye disease. Lilly said about 3 million people in the United States have Graves’ disease, and that roughly 25 to 40 percent of them later develop TED, which can bring pain, a changed face, and, in severe cases, vision loss.

Current pills and procedures do not remove those antibodies. Merida built Fc-based proteins meant to find only the harmful antibodies, ship them to liver sinusoidal endothelial cells for breakdown, and also quiet the B cells that make more of them. Healthy immune parts are supposed to keep working.

Gutierrez’s group described MER511 as a monomeric TSHR-IgG Fc fusion that pairs the receptor’s outer domain with a mutated Fc. The Fc is tuned to grab FcγRIIB, the inhibitory and endocytic receptor, and to drop binding to activating Fc receptors and to complement C1q. In the published abstract, MER511 neutralized patient-derived stimulating antibodies, did not bind TSH or change TSH signaling, and, in a humanized mouse, cleared transferred TSHR antibodies without lowering total mouse IgG, the contrast the authors drew with the FcRn drug class.

HOW MER511 IS BUILT TO WORK

• The bait: A TSHR piece binds the stimulating autoantibodies that drive Graves’ disease and TED.
• The dump: Mutated Fc sends the complex into liver cells through FcγRIIB for breakdown.
• The source: The same construct is designed to inhibit the antigen-specific B cells that keep making the antibodies.
• The spare parts: Total IgG and normal TSH signaling are meant to stay intact, unlike broad IgG-lowering shots.

Lilly said initial Phase 1 data already showed large cuts in pathogenic thyroid-stimulating antibodies and an early safety profile it called favorable. It has not published the patient count, the size of the drop, or the dose that produced it.

We’re building our pipeline around therapies that meaningfully change the course of disease, not just its downstream effects. Merida’s lead program is designed to do exactly that: selectively and directly eliminating the autoantibodies causing Graves’ disease and thyroid eye disease, while preserving normal immune function, with initial Phase 1 data already pointing to the potential for improved efficacy and safety.

Francisco Ramírez-Valle, M.D., Ph.D., senior vice president, Lilly immunology research and early clinical development, in the deal statement

Townsend said Merida was founded to treat autoimmune and allergic disease by going after the antibodies that drive it, rather than suppressing the immune system across the board, and that Gutierrez’s group had taken that idea from a concept to clinical data. Joining Lilly, he said, gives that science the resources to test whether it helps patients.

NEXUS Tests Vein and Skin Doses Through 2028

Those early signals sit inside the NEXUS Phase 1 trial, a first-in-human study Merida opened on Dec. 19, 2025. The record still lists the sponsor as Merida. It is recruiting about 100 adults aged 18 to 65 with documented Graves’ disease who are on a stable antithyroid drug. Primary completion is estimated for July 24, 2028. Fifteen sites are listed, 11 in the United States and four in Spain.

Part A tests single rising intravenous doses and one under-the-skin dose against placebo. Part B tests multiple under-the-skin doses. Participants and investigators are blinded; the sponsor is not. The main goals are side effects and clinically important shifts in labs, heart tracings, vital signs, and exams, plus how the body handles the drug.

NEXUS also shuts out the TED claim in the press release. People with current active or chronic moderate-to-severe TED are excluded, as are those who had TED-directed drugs, surgery, or orbital radiation in the prior three months. The Phase 1 cohort is Graves’ disease on methimazole-class pills, not the eye disease Lilly named in the same sentence as MER511. TED remains a planned use, not the population now being dosed.

3 Million Americans and No Antibody Drug

Standard Graves care still works around the antibody. Antithyroid drugs such as methimazole and propylthiouracil slow hormone production. Radioiodine and surgery remove or destroy the gland, and many patients then take replacement hormone for life. Lilly noted that people with Graves’ disease face higher cardiovascular risk and death, and that no approved option directly targets the autoantibodies.

TED care is further along, and it still does not touch those antibodies either. Amgen’s Tepezza (teprotumumab) blocks the insulin-like growth factor-1 receptor on orbital tissue. Amgen said Tepezza sales of $1.9 billion in 2025, with more than 25,000 patients treated since launch. Viridian’s Lumvoa (veligrotug), another IGF-1R antibody, won U.S. approval in 2026 with a label that covers active and chronic TED and a course of five intravenous infusions over 12 weeks. Steroids remain in the mix for the eye.

TODAY’S GRAVES AND TED TOOLKIT

• Antithyroid pills: Methimazole and propylthiouracil cut hormone output but leave the stimulating antibodies in place.
• Definitive gland treatment: Radioiodine or thyroidectomy ends overproduction by damaging or removing the thyroid.
• TED biologics: Tepezza and Lumvoa target IGF-1R around the eye, not the TSHR autoantibodies that start both diseases.
• Steroids and surgery: Anti-inflammatory drugs and orbital operations still handle flares and leftover damage.

If MER511 does what the mouse work implies, a patient could in theory keep a working thyroid and a working immune system while the stimulating antibodies fall. That is the clinical wager inside the $2.875 billion cap. It is also unproven in a controlled Graves trial of any size, and NEXUS will not even try it in people with serious TED.

Who Else Is Racing in Graves’ and TED?

Lilly is not buying a quiet niche. Immunovant already has human Graves data with an FcRn blocker, which lowers IgG across the board rather than picking out TSHR antibodies. In a 25-person Phase 2 study of batoclimab, 18 of 25 patients were responders at week 24, meaning T3 and T4 were at or below the upper limit of normal with no rise in antithyroid-drug dose. Of 21 who entered six months off drug, 17 still had normal thyroid hormone, and 8 of 17 responders were off antithyroid drugs. Immunovant is now running two IMVT-1402 Graves trials and has said top-line data are due in 2027, a year before NEXUS is even scheduled to finish.

FcRn is not a clean win in the eye. An approved FcRn drug failed to beat placebo on eye bulging in TED studies, a reminder that stripping lots of IgG is not the same as treating orbital disease. That miss is one reason a TSHR-specific degrader is interesting. It is also why paying Phase 1 prices, with a 2028 primary-completion date, is a hard sell if Graves remission is the only prize. Immunovant is already arguing it may have a disease-modifying Graves shot with a 2027 clock.

THE GRAVES AND TED FIELD LILLY JUST JOINED

A separate TSHR-autoantibody degrader class is forming behind Merida. Biohaven and Lycia are building molecules that use ASGPR, a liver receptor, rather than FcγRIIB. Sanofi’s rilzabrutinib is a BTK inhibitor aimed at the B-cell side. TSHR monoclonal antibodies and TSHR/IGF-1R bispecifics are also in early files. The crowded map is the objection to Lilly’s price: MER511 is cleaner on paper than FcRn, and later than several rivals on the calendar.

High starting autoantibody levels could also blunt a degrader that has to bind each harmful clone. That is a live scientific question, not a talking point. Lilly is betting the dual hit on circulating antibody plus the source B cell is worth more than getting to a Graves readout first.

Lilly Also Gets a Preclinical Allergy Shot

The check is easier to defend if MER511 is a prototype, not the product. Lilly listed MER769 as a preclinical program aimed at food allergy, asthma, chronic spontaneous urticaria, and other diseases driven by the antibody that triggers allergic reactions, IgE. Earlier-stage work covers kidney diseases such as primary membranous nephropathy.

MER769 has not entered the clinic. Food-allergy patients who saw the headlines asked, fairly, what a Graves buyout does for them. The honest answer is that Lilly now owns a design that is supposed to delete IgE the way MER511 deletes TSHR antibodies, and that design is still a lab asset. If it works, the commercial surface is much larger than 3 million Graves patients. If it stalls, Lilly will have paid a Graves-and-TED premium for a platform with one live human program.

Ramírez-Valle said Lilly sees room to use the same precision approach across a wide range of antibody-driven diseases. That sentence is doing a lot of work in a deal whose disclosed lead is a Phase 1 thyroid drug. The allergy and kidney files are why a $121 million company became a $2.875 billion target in 16 months. They are also why the bet stays open after a Graves readout, good or bad.

Another Root-Cause Buy on the Obesity Tab

Lilly can write this check because Mounjaro and Zepbound are throwing off cash. Second-quarter 2026 results from the company showed revenue of $23.0 billion, up 48 percent. That surplus has been recycled into a near-monthly biotech shopping list. This year alone Lilly has struck multibillion-dollar deals with AtaiBeckley, Centessa Pharmaceuticals, and Kelonia Therapeutics, and it has made recent vaccine buys aimed at chronic disease rather than downstream symptoms.

Merida fits that pattern. Ramírez-Valle’s line about changing the course of disease, not the downstream effects, is the same idea as a vaccine that tries to intercept a chronic illness before it starts. The difference is stage. A Phase 1 autoantibody degrader with a 2028 completion date is a longer-dated coupon than a marketed GLP-1 franchise. The obesity cash makes the coupon affordable. It does not make the science finish faster.

WHAT WE KNOW

• The cap: Lilly will pay up to $2.875 billion in cash, with close aimed at the fourth quarter of 2026.
• The lead: MER511 is in NEXUS, a ~100-person Phase 1 Graves study that started Dec. 19, 2025, and is estimated to finish July 24, 2028.
• The claim: Lilly says early Phase 1 data cut thyroid-stimulating antibodies, without publishing the N or the percent drop.

WHAT IS UNCONFIRMED

• The split: The upfront payment versus milestone stack has not been disclosed.
• The TED path: NEXUS excludes active moderate-to-severe TED, so a TED program still has to be started.
• The allergy clock: No human study of MER769 has been posted.

Immunovant’s Graves readouts are due in 2027. NEXUS is not due to finish until July 24, 2028. Lilly’s purchase is scheduled to close in the fourth quarter of 2026, after which the company will decide how to book it under GAAP. The bet is now Lilly’s to run, on a clock the rest of the Graves field is already using.

Disclaimer: This article is news reporting and analysis of a proposed biotech purchase and of early-stage drug research. It is for information only and is not medical advice, investment advice, or a recommendation to start, stop, or switch any treatment or to buy or sell any security. Readers who have Graves’ disease, thyroid eye disease, or another immune condition should talk with a licensed physician or endocrinologist before changing care, and readers who are considering Lilly or peer-company shares should consult a qualified financial adviser. Figures, trial statuses, and deal terms reflect company statements and public records as of Sept. 2, 2026, and may change as the purchase closes and as NEXUS and rival studies report more data.