Eli Lilly said on Monday it would acquire Loxo Oncology for about $8 billion in cash, buying into a portfolio of targeted medicines to treat cancers.

The offer of $235 per share in cash represents a premium of about 68 percent to Loxo's Friday close. Loxo's shares surged 66.2 percent to $232.36 on Monday, while Lilly dropped 1.50 percent to $112.94 a share.

"We'd like to grow our presence in oncology. We have a good set of medicines there but we'd like to expand that because there's so much exciting science for patients emerging in oncology to invest in," Lilly CEO David Ricks told CNBC's Jim Cramer on "Squawk on the Street."

Lilly said it will update its financial outlook to include the full purchase price of the acquisition when it announces its fourth-quarter earnings in February. The cost of cash was already worked into its guidance for fiscal year 2019.

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.

President of Lilly Oncology Anne White told analysts on a conference call that the company plans to continue that partnership.

"We believe that Lilly will bring a great deal of strength to this partnership in addition to what Loxo has already done," she said.

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 is its legal adviser. Goldman Sachs is the financial adviser, while Fenwick & West is legal adviser to Loxo.

The Lilly acquisition comes a week after Bristol-Myers Squibb announced plans to buy Celgene in a blockbuster $74 billion deal.

—CNBC's Amelia Lucas contributed to this report.