Diabetes drug specialist Novo Nordisk has agreed to acquire Dicerna Pharmaceuticals in a deal worth $3.3 billion, a strategic bet that an existing wide-ranging alliance between the two will yield multiple medicines for a range of diseases.
Novo will pay $38.25 per share in cash for Dicerna, an 80% premium to the $21.28 closing price of the biotech's shares Wednesday — the third-highest premium in a deal for a publicly traded biotech this year, according to BioPharma Dive's database. The boards of both companies have unanimously approved the deal, which is expected to close in the fourth quarter.
For Novo, the buyout is well-timed. Shares in Dicerna are trading near their lowest price in the past year, largely due to disappointing clinical results for the biotech's lead program, an experimental treatment for a liver disease known as primary hyperoxaluria. The results called into question whether the drug, nedosiran, would work for roughly half of patients with the disease. Before the disclosure, Dicerna shares were trading at roughly $37 apiece, matching levels reached only shortly after the company's IPO in 2014. Shares fell to less than $20 afterwards.
The acquisition is the latest validation of so-called RNA interference drugs, a drugmaking method that involves silencing genes before they can make harmful proteins. The field, based on scientific work that won a Nobel Prize in 2006, drew significant interest from pharmaceutical companies many years ago because of its potential to create drugs capable of reaching disease targets other medicines couldn't.
In the mid-2000s, large drugmakers jumped into RNAi. The field's largest company, Alnylam, for instance, struck big partnerships with Roche, Novartis and others. Merck & Co. acquired Sirna Therapeutics for $1.1 billion. But they left quickly thereafter after facing challenges delivering RNAi medicines into cells, a problem that took years to solve. Merck closed Sirna's labs, while Roche exited RNAi research altogether, a move that sent shock waves through the field at the time.
RNAi, however, has since had a renaissance. Alnylam won U.S. approval of the first RNAi drug, Onpattro, in 2018. Two other Alnylam drugs for rare conditions have followed and another it discovered, now owned by Novartis, is cleared in Europe to treat certain types of high cholesterol.
In the meantime, larger companies have cozied back up to RNAi drugmakers. Johnson & Johnson, for instance, promised up to $3.7 billion in an alliance with Arrowhead Pharmaceuticals struck in late 2018. And Dicerna, which has been around since 2006 but hasn't yet developed a marketed drug, signed a string of licensing deals with Eli Lilly, Roche, Alexion and others.
Among those deals was a partnership with Novo, through which the two aimed to develop treatments for chronic liver diseases and cardiometabolic conditions like obesity, NASH and Type 2 diabetes. None of those treatments are in human testing — incidentally, cardiometabolic Dicerna drugs owned by Novo's main rival, Lilly, are further along. The first human trial from the collaboration should begin next year.
While many of Dicerna's clinical-stage programs are licensed out to other partners, Novo could recoup some of its acquisition costs through royalties on any of those drugs that make it through to market. Dicerna has two drugs in Phase 2 testing, for alpha-1 antitrypsin deficiency and hepatitis B infections, that it's co-developing with Alnylam and Roche, respectively.
News of the deal for Dicerna sent shares in other RNAi drugmakers like Arrowhead and Alnylam higher. The acquisition "reiterates pharma's appetite for platform technologies that are de-risked and close to commercial stage," wrote Luca Issi, an analyst at RBC Capital Markets, and "will have a positive read through to the broader RNAi space."
On Thursday, Bloomberg reported that Alnylam may be a potential buyout target for Novartis, which is newly flush with cash after selling its stake in Roche for about $20 billion. The two companies were previously allied in the mid-2000s, but Novartis backed out of RNAi development in 2014 and sold the Alnylam assets it owned to Arrowhead the following year.
In 2019, though, Novartis bought The Medicines Co. for $10 billion to gain access to an RNAi drug that Alnylam discovered.