Jazz Pharma snaps up leukemia drug with $1.5 billion deal for Celator
- Irish drug company Jazz Pharmaceuticals reached a deal to buy Ewing, New Jersey-based Celator Pharmaceuticals for $1.5 billion, gaining access to an investigational leukemia drug, the companies announced Monday.
- The agreement values Celator at $30.25 per share, nearly double Celator's closing price on Friday last week. Jazz will finance the transaction with a combination of cash and debt.
- Jazz is facing the threat of generic competition for its top-selling narcolepsy drug Xyrem, which accounted for 72% of its 2015 revenue.
Jazz expects its deal with Celator will add to non-GAAP adjusted earnings as soon as 2018, stemming mainly from the planned launch of Celator's drug Vyxeos, an investigational treatment for acute myeloid leukemia (AML). The company said it plans to submit Vyxeos for FDA review by the end of third quarter this year.
"As Celator is currently preparing a regulatory submission in the U.S. for Vyxeos, this acquisition would add a new orphan product with the potential for short- and long-term revenue generation and expansion of our international commercial platform," said Jazz CEO Bruce Cozzad.
In March, Celator announced positive results from a Phase 3 trial of Vyxeos in patients with secondary AML which showed treatment with the drug helped improve overall survival. Median overall survival times in patients receiving Vyxeos was 9.56 months, compared to 5.95 months for patients treated with the standard of care. Over 40% of patients in the Vyxeos arm were alive after one year.
Jazz has a small presence in oncology with its drug Erwinaze, a treatment for acute lymphoblastic leukemia.
But its main revenue-generating drug is Xyrem, which pulled in $995 million in sales last year and has seen continued growth in the first quarter. That revenue is under threat, however, as seven companies have filed abbreviated new drug applications with the FDA to market generic versions of the drug.
Jazz has moved to defend its patent against each threat and has already reached a settlement with two of the seven companies, according to regulatory filings. An approval of a generic copy of Xyrem would have "a material adverse effect" on business and growth, Jazz said in a recent filing.
Celator has previously forecast peak sales of $690 million to $780 million for Vyxeos if its use is expanded into broader AML populations, reports The Street. If achieved, that would go some ways to mitigating any adverse effect to Jazz's business from generic competitors to Xyrem.
The acquisition is expected to close in the third quarter of 2016.
Follow Ned Pagliarulo on Twitter