- Alexion Pharmaceuticals is spending $930 million in cash to acquire Achillion Pharmaceuticals, a Pennsylvania-based company developing drugs for some of the same diseases Alexion targets.
- Achillion's work revolves around oral inhibitors of Factor D — a regulatory protein found in the alternative complement pathway, which is part of the body's immune system. Achillion's most advanced drug is in mid-stage testing for two rare diseases, paroxysmal nocturnal hemoglobinuria and C3 glomerulopathy, which are also known respectively as PNH and C3G.
- Additionally, the deal would give Alexion a second-generation Factor D inhibitor that's in Phase 1 testing for PNH and other alternative pathway diseases. However, the overlap between the two companies' research projects has analysts somewhat concerned the acquisition may not go through or be delayed, given that a couple recent biopharma deals have run into antitrust challenges from the Federal Trade Commission.
The FTC has weighed unusually heavy on biopharma dealmakers for the past several months. Particularly unnerving for investors have been antitrust concerns over Bristol-Myers Squibb's and Roche's pending acquisitions of Celgene and Spark Therapeutics, respectively.
Analysts at Piper Jaffray, SVB Leerink and Stifel all viewed the Alexion deal as a positive for either or both companies, but acknowledged that its closure, which is slated for the first half of 2020, hinges on the FTC's views.
"[R]ationally speaking this seems a little absurd, but with the Roche/Spark transaction seemingly delayed due to the overlap between a commercial franchise (Hemlibra) and an early stage gene therapy program, some concern here is warranted," wrote Paul Matteis of Stifel in a note to clients.
Regarding Roche-Spark, the FTC appears to have taken issue with the deal because it would put multiple disruptors to the hemophilia drug market under one roof. Roche didn't provide any new details about the holdup on an earnings call Wednesday, but the months-long delay has become an overhang both for the Swiss pharma giant as well as gene therapy developers.
Meanwhile, Bristol-Myers and Celgene have had to sell off the latter's blockbuster Otezla (apremilast) franchise to address FTC concerns and move forward with their deal. With Otezla, the combined company would have held two marketed products for psoriatic arthritis and another late-stage experimental therapy for psoriasis.
Amgen ultimately bought Otezla for $13 billion — though there were some questions around the deal since Amgen also has a powerful foothold in the immunology drug market.
Alexion's Soliris (eculizumab) is another blockbuster therapy. Like Achillion's drugs, it targets the complement immune system and has been shown to be an effective therapy across multiple rare diseases, including PNH. Alexion's portfolio houses a Soliris follow-on treatment, called Ultomiris (ravulizumab), that received its first Food and Drug Administration approval last year in PNH.
The company is currently working to switch patients from Soliris on to Ultomiris.
Per terms of the Achillion deal, Alexion would pay in cash $6.30 per share of the target's common stock. Alexion recorded about $2.1 billion in cash, cash equivalents and marketable securities as of June 30.
Alexion noted that the deal would also bring in Achillion's cash reserves, which totaled $230 million as of Sept. 30. Achillion investors could receive an additional $2 per share through a contingent value right if the biotech's lead drug, danicopan, gets FDA approval and its second-generation Factor D inhibitor, ACH-5228, moves into Phase 3 testing.