Dive Brief:
- Sanofi SA announced Monday morning it is picking up Biogen spin-out Bioverativ Inc. for $105 per share in cash, in a deal worth $11.6 billion. A tender offer is expected to commence in February.
- Announced in May 2016, Biogen officially completed the spin-out of Bioverativ in January 2017. The new company had $847 million in sales in 2016 and $41 million in royalties.
- Sanofi shares were down nearly 4% in pre-market trading on Monday morning to linger near $42.85 per share. While shares of Bioverativ shot up 62.85%, or $40.29, in premarket trading to open the trading day at $104.41. The deal price is a 64% premium to Bioverativ's Friday closing price.
Dive Insight:
Analysts and investors were expecting M&A to tick up in 2018, but a relatively quiet J.P. Morgan Healthcare Conference in early January disappointed some. After both Sanofi and Celgene announced multi-billion dollar acquisitions Monday morning, the tide appears to be changing.
But at least one analyst echoed the concerns of investors about the quality of the acquisitions.
"We note that many investors have expressed some confusion and concern to us with regard to the larger deals which have started 2018 (and smaller ones which ended 2017), which makes us wonder if the only companies who have been willing to sell at this point are the ones which have more challenging outlooks. Whether that translates into buyers' remorse or not remains to be seen," wrote Evercore ISI analyst Steven Breazzano.
Sanofi has weathered a rough patch in recent years as its blockbuster insulin Lantus (insulin glargine) faced competition and pricing pressures hurt the diabetes market. But the specialty pharma unit Genzyme has been a bright spot for the company.
The French pharma has gained some near-term success through its partnership with Regeneron Pharmaceuticals. Genzyme and Regeneron have gained approval for three compounds in recent years and have others working their way through the pipeline, including a PD-1 inhibitor in the oncology setting.
The acquisition of Bioverativ will give Sanofi two longer-acting, already marketed hemophilia therapies: Eloctate (Antihemophilic Factor VIII, Fc Fusion Protein) and Aprolix (Coagulation Factor IX, Fc Fusion Protein). The drugs have been on the market since 2014 and have had slow, but steady growth.
Yet, a number of innovative drugs and gene therapies are expected to enter the hemophilia market by 2020 that could limit the future success of Eloctate and Aprolix. Bioverativ management has said it expects both its own long-acting products, as well as other innovative therapies, to eat away at the marketshare of shorter acting hemophilia drugs.
When asked about the competition on a call with analysts, Sanofi seemed unfazed.
"We believe those innovative therapies, including gene therapies, will gain market share, but slowly. We believe that Factor VIII and Factor IX will remain the standard-of-care," said CEO Olivier Brandicourt on a Jan. 22 call.
Sanofi execs added on the call that they look forward to participating in those innovations for the market. Bioverativ has other drugs for hemophilia in early phases of its portfolio. "We clearly believe we are on the right area of the market today," said Bill Sibold, EVP of Sanofi Genzyme, indicating that Sanofi expects that market to continue to grow.
Sanofi also believes the acquisition will help bolster the development of fitusiran, an RNA interference compound for both hemophilia A and B originally developed by Alnylam Pharmaceuticals.
Just prior to its official spin-out, Bioverativ acquired two compounds from Sangamo Biosciences to help flesh out its own pipeline, adding programs for sickle cell disease and beta-thalassemia.
