- Johnson & Johnson on Thursday announced it would acquire Swiss biotech Actelion for $30 billion in cash, opening up its wallet to secure Actelion's leading portfolio of treatments for pulmonary arterial hypertension (PAH).
- Per deal terms, J&J will pay $280 per share for Actelion, which will spin out its drug discovery and early-stage R&D efforts into a new public Swiss company to be led by Actelion CEO Jean-Paul Clozel.
- The unique agreement gives J&J a franchise of marketed drugs on track to earn nearly $2.5 billion in sales this year, immediately boosting earnings per share for the pharma giant. At the same time, spinning out Actelion's R&D efforts allows Clozel to retain leadership over a pipeline Actelion valued more than J&J.
Acquiring Actelion and its PAH portfolio will bolster J&J's pharmaceutical revenues and help offset declining sales of the pharma giant's top-earner Remicade (infliximab), which now faces biosimilar competition in the U.S.
J&J has seen promising growth from new cancer drugs Darzalex (daratumumab) and Imbruvica (ibrutinib), and has several major drugs in its pipeline nearing commercialization. But slowdowns in its neuroscience and cardiovascular segments weighed on revenues in 2016, while the competitive threat to Remicade had investors looking for a nearer term spark.
Actelion delivers that spark, albeit at a price. J&J successfully boxed out French drugmaker Sanofi in negotiating a deal but will end up paying an 80% premium above Actelion's closing price on Nov. 23, the day before reports of a takeover trickled out.
J&J expects the deal to increase long-term revenue growth by at least 1% above current consensus estimates, and to raise long-term earnings growth by 1.5% to 2.0%.
Sales of Actelion's current top-earner, Tracleer (bosentan), have fallen in recent quarters due to generic competition. Future growth, then, will come from two successor drugs, also in PAH: Opsumit (macitentan) and Uptravi (selexipag).
J&J will fund the transaction with cash currently held off-shore and expects the deal to close in the second quarter, pending the tender of at least 67% of Actelion shares into the offer.
For Actelion shareholders, the deal is particularly attractive.
"Actelion’s shareholders can monetize their holdings in Actelion at a highly attractive cash price of $280 per share, while at the same time retaining a significant stake in the future potential upside of Actelion’s earlier stage pipeline, through their ownership of R&D NewCo," said Jean Pierre Garnier, chairman of the board at Actelion, using the placeholder name for the spin-out.
Clozel will take the reins of "R&D NewCo," which will focus on treatments for specialty cardiovascular, central nervous system, immunological and orphan diseases. Its lead candidate, ACT-132577, is in Phase 2 development for resistant hypertension.
J&J will hold a 16% stake in R&D NewCo, with rights to another 16% through a convertible note.