Eli Lilly is further expanding into the radiopharmaceutical space, securing a deal with Radionetics Oncology that includes an option to acquire the San Diego biotechnology company for $1 billion. Announced on Monday, the agreement involves an upfront payment of $140 million to Radionetics for the option rights. During an “exercise period,” Radionetics will continue to develop its radiopharmaceutical drug pipeline, after which Lilly can decide whether to proceed with the acquisition.

Radionetics is focused on creating small molecule radiopharmaceuticals targeting G protein-coupled receptors, a prevalent family of proteins with many potential disease targets, particularly in solid tumors. Radiopharmaceuticals, which offer a targeted alternative to traditional radiation therapy, have seen a surge in pharmaceutical investment. Major firms like Lilly, Bristol Myers, and AstraZeneca have entered the space, driven by technological advancements, clinical successes, and regulatory approvals.

Historically, radiopharmaceuticals have been difficult to manufacture and deliver, requiring tightly managed supply chains to prevent the decay of radioisotopes. However, increased investment is boosting capacity in the biotech sector. Earlier this year, Lilly paid $60 million to startup Aktis Oncology for rights to develop treatments against targets selected by Lilly.

Lilly’s largest investment in the field came last year when it acquired Point Biopharma for $1.4 billion, gaining three clinical-stage candidates, including two potential competitors to Novartis’s radiopharmaceuticals, Pluvicto and Lutathera, which generated over $1.5 billion in sales last year.

Radionetics was spun out from Crinetics Pharmaceuticals in 2021 with $30 million to develop nonpeptide radiopharmaceuticals for various oncology indications. The company raised a Series A of $52.5 million early this year, with backing from investors such as 5AM Ventures, Frazier Life Sciences, DCVC Bio, GordonMD Global Investments, and Crinetics Pharmaceuticals.