(Adds background, details on deal, share price)
Jan 7 (Reuters) - Eli Lilly and Co said on Monday it would buy Loxo Oncology Inc for about $8 billion in cash, buying into a portfolio of targeted medicines to treat cancers caused by rare gene mutations.
The offer of $235 per share in cash represents a premium of about 68 percent to Loxo's Friday close. Loxo's shares surged 32.8 percent to $185.70 in light trading before the bell, while those of Lilly dropped 2.7 percent to $111.60.
Last year, U.S. regulators approved Loxo's first commercial medicine, Vitrakvi, which was shown to be effective against a wide variety of cancers driven by a single, rare genetic mutation. The drug is sold in partnership with Bayer AG .
Loxo Oncology is developing a pipeline of targeted medicines focused on such cancers that can be detected by genomic testing.
Deutsche Bank is Lilly's financial adviser and Weil, Gotshal & Manges LLP is its legal adviser. Goldman Sachs & Co LLC is the financial adviser, while Fenwick & West LLP is legal adviser to Loxo. (Reporting by Ankur Banerjee in Bengaluru Editing by Saumyadeb Chakrabarty)