JPM: Takeda acquires Ariad in $5.2B deal

Dive Brief:

  • Japanese drugmaker Takeda provided the first major deal of the J.P. Morgan Healthcare Conference, announcing early Monday morning a takeover of Ariad Pharmaceuticals which valued the cancer specialist at $5.2 billion. 
  • Takeda has been itching to improve its oncology products and pipeline. The key assets it gains from the deal, therefore, are brigatinib, a treatment in Phase 2 testing for a subpopulation of patients with non-small cell cancer (NSCLC), and Iclusig (ponatinib), an FDA-approved treatment for two types of leukemia.
  • "Opportunities to acquire such high-quality, complementary targeted therapies do not come often, and we are very excited about the potential for this transaction to benefit patients, our shareholders and other stakeholders," Takeda CEO Christophe Weber said in a statement.

Dive Insight:

Takeda, like many drugmakers, has worked tirelessly as of late to establish a strong line of oncology products. The company initiated a $725 million effort to streamline R&D this summer, and a few months later locked down a deal worth up to $790 million with Crescendo Biologics for access to the U.K. company's drug conjugate platform.

Monday's deal represents the biopharma's biggest step in that direction to date, and fulfills another goal of strengthening its presence in U.S. markets.

Conversely, Ariad has been pushing to improve engagement with patients with NSCLC, but criticism over the company's pricing of Iclusig has eaten up some of its resources and attention as of late. 

"Although we are unable to predict how long these matters will continue or their outcome, we expect that we will incur significant costs in connection with these matters and that responding to these matters will represent a significant distraction for our management team," Ariad said in its most recent quarterly filing with the Securities and Exchange Commission. 

In addition to Iclusig and brigatinib​, Ariad also brings to the table AP32788, a tyrosine kinase inhibitor aimed at treating NSCLC in Phase 1/2 enrollment.

Under deal terms, Takeda will pay $24 for each of Ariad's 194.3 million outstanding shares. However, the enterprise value of the transaction, which takes into account line items such as debt and cash and cash equivalents, clocks in at $5.2 billion, according to the Jan. 9 statement. Ariad shares traded at $13.74 at market close on Friday, Jan. 6, meaning Takeda's offer comes at a nearly 75% premium. 

Takeda plans to finance the deal with $4 billion of new debt and its cash on hand. The company reported ¥619 billion ($5.3 billion) of cash and cash equivalents as of Sept. 30.

The acquirer also expects the deal to be accretive to core earnings by 2018, bolstered mostly by Iclusig sales. Ariad reported $133.2 million in revenue in its last quarterly filing, and projected 2016 global sales of Iclusig to range between $170 million and $180 million.

The companies plan to close the deal by the end of February.

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Filed Under: Mergers and Acquisitions / Deals
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