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Eli Lilly has entered into a definitive agreement to acquire Sigilon Therapeutics, a biopharma focused on developing functional cures for acute and chronic diseases, for over $300m.

Lilly, which owned a nearly 8.44% stake in Sigilon as of the end of March, will pay $14.92 per share, or $34.6m in upfront cash, for the rest of the company.

Sigilon shareholders will also be eligible to receive an additional $111.64 per share if certain developmental and regulatory milestones are achieved, Lilly said in a statement.

The companies have been working together since 2018, when Lilly paid Sigilon $63m upfront for a licensing deal to develop encapsulated cell therapies for type 1 diabetes, including lead programme SIG-002.

“The goal of these therapies is to free patients from constant disease management by sensing blood glucose levels, restoring insulin production and releasing it over the long term,” Lilly explained.

Almost 1.9 million people in the US have type 1 diabetes, according to the American Diabetes Association. The condition requires lifelong care, including the regular administration of insulin, either through multiple daily injections or continuous infusion using a pump.

The acquisition gives Lilly access to SIG-002, which is designed to replace the islet cells that are at the root the condition, and reduce the need for patients to take insulin to control their blood sugar levels.

Sigilon’s chief executive officer, Rogerio Vivaldi, said: “This agreement represents the culmination of the important work led by our research and development team to continue advancing SIG-002 at Lilly.”

“Lilly is well-positioned to apply its industry-leading clinical and technical capabilities to harness the full potential of SIG-002 for the benefit of patients and their caregivers,” Vivaldi added.

Ruth Gimeno, group vice president, diabetes, obesity and cardiometabolic research at Lilly, said: “By combining Sigilon’s talent and expertise in cell therapy with the knowledge and skills of Lilly’s research and development teams, we will enhance opportunities to create innovative islet cell therapy solutions to improve the care of people living with diabetes.”

The deal, which is expected to close in the third quarter of this year, comes just one day after the US Food and Drug Administration approved CellTrans’ Lantidra (donislecel) as the first cellular therapy to treat patients with type 1 diabetes.

The authorisation specifically applies to adults who are unable to meet their target blood glucose levels because they have repeated episodes of severe low blood sugar.