Div­ing deep in­to the he­mo­phil­ia mar­ket, Sanofi strikes an $11.6B Biover­a­tiv buy­out

Olivi­er Brandi­court

Sanofi $SNY has fi­nal­ly bagged a multi­bil­lion-dol­lar biotech buy­out.

In a state­ment ear­ly Mon­day the phar­ma gi­ant said it has closed a deal to ac­quire Bio­gen spin­out Biover­a­tiv $BIVV for al­most $11.6 bil­lion — a 64% pre­mi­um on its $64.11 Fri­day close at $105 a share. The ac­qui­si­tion helps ex­plain a new­ly re­worked pact with Al­ny­lam that put Sanofi on course to build­ing a fran­chise in the he­mo­phil­ia field.

“With Biover­a­tiv, a leader in the grow­ing he­mo­phil­ia mar­ket, Sanofi en­hances its pres­ence in spe­cial­ty care and lead­er­ship in rare dis­eases, in line with its 2020 Roadmap, and cre­ates a plat­form for growth in oth­er rare blood dis­or­ders,” Sanofi CEO Olivi­er Brandi­court said in a state­ment. “To­geth­er, we have a great op­por­tu­ni­ty to bring in­no­v­a­tive med­i­cines to pa­tients world­wide, build­ing on Biover­a­tiv’s suc­cess in dri­ving new stan­dards of care with its ex­tend­ed half-life fac­tor re­place­ment ther­a­pies.”

The deal gives Sanofi a big stake in the fast-chang­ing he­mo­phil­ia mar­ket, where Roche just scored with a new OK for Hem­li­bra — which clear­ly threat­ens Biover­a­tiv’s busi­ness — and a group of de­vel­op­ers like Bio­Marin and Spark/Pfiz­er are look­ing to dis­rupt the busi­ness with new gene ther­a­pies now in late-stage de­vel­op­ment.

Sanofi shares dropped a lit­tle more than 3% Mon­day morn­ing, shed­ding slight­ly more than $3 bil­lion in mar­ket cap.

Biover­a­tiv mar­kets Eloc­tate and Al­pro­lix in part­ner­ship with Stock­holm-based So­bi. Some longterm ob­servers in the field note that while key play­ers in he­mo­phil­ia like Shire and Waltham, MA-based Biover­a­tiv face big changes ahead, this is the kind of mar­ket where physi­cians and pa­tients may be slow to switch from the drugs that have long sta­bi­lized their dis­ease.

Sanofi is bet­ting big on that as­sump­tion, gam­bling bil­lions that it can com­pete as the mar­ket de­vel­ops — de­spite earn­ing a rep for fail­ing at in-house in­no­va­tion over the re­cent past.

Sanofi got in­to rare dis­eases in a big way with the $20 bil­lion ac­qui­si­tion of Gen­zyme in Boston, where it’s been deeply root­ed ever since. Sanofi al­so re­cent­ly re­struc­tured its am­bi­tious RNAi deal with Al­ny­lam to gain glob­al rights on the he­mo­phil­ia ther­a­py fi­tusir­an, per­haps with this deal in mind.

Sanofi’s Brandi­court has been left snubbed in the last cou­ple of buy­out talks, miss­ing out on Medi­va­tion as well as Switzer­land’s Acte­lion af­ter get­ting beat­en out by Pfiz­er and J&J re­spec­tive­ly. In the mean­time, its one re­cent claim to fame, the dengue vac­cine Deng­vax­ia, has im­plod­ed in the wake of a be­lat­ed ac­knowl­edg­ment of some se­vere safe­ty is­sues.

Sanofi has seen rare dis­eases as an al­ter­na­tive to its di­a­betes busi­ness, where it faces grow­ing price com­pe­ti­tion as well as the loss of mar­ket share to gener­ic com­pe­ti­tion. Some an­a­lysts struck a dis­tinct­ly skep­ti­cal tone in re­view­ing the deal Mon­day morn­ing.

Sea­mus Fer­nan­dez at Leerink says the deal makes sense, but added that there could eas­i­ly be trou­ble ahead for Sanofi. He not­ed:

SNY is bolt­ing on the Biover­a­tiv he­mo­phil­ia Busi­ness to its rare dis­ease port­fo­lio for $11.6B, a strate­gi­cal­ly sound move, in our opin­ion, that will bring near-term ac­cre­tion to the busi­ness and where SNY’s re­cent­ly re­struc­tured deal with AL­NY (MP) pro­vides a medi­um-term pipeline oppt’y with­in the Fac­tor VI­II busi­ness with fi­tusir­an. The biggest chal­lenge for SNY mgmt will be con­vinc­ing in­vestors that – much like SH­PG’s ac­qui­si­tion of Bax­al­ta – the cur­rent he­mo­phil­ia mar­ket will not be dis­rupt­ed by new tech­nolo­gies (Gene Ther­a­py) and prod­uct launch­es (Roche’s ACE910). At a min­i­mum, af­ter a num­ber of spec­u­lat­ed un­suc­cess­ful bids, in­clud­ing Medi­va­tion and Acte­lion, SNY in­vestors now have a deal to di­gest that is im­me­di­ate­ly ac­cre­tive to 2018 earn­ings and es­ti­mat­ed to be “up to 5% ac­cre­tive” in 2019. Whether or not this lev­el of ac­cre­tion is achiev­able re­mains to be seen, but on bal­ance, the price tag is not com­plete­ly out­side of that paid for oth­er biotech­nol­o­gy fran­chis­es.

Biover­a­tiv had a staff of 350 as of last Feb­ru­ary as well as a small pipeline of its own. There’s a new pro­gram for ST-400, a gene-edit­ed cell ther­a­py can­di­date for peo­ple with trans­fu­sion-de­pen­dent be­ta-tha­lassemia, part­nered with Sang­amo and pre­clin­i­cal gene ther­a­py work in­volv­ing the renowned San Raf­faele In­sti­tute in Italy. CEO John Cox took the op­por­tu­ni­ty to ex­press just how hap­py he was with the ac­qui­si­tion, which was ap­proved unan­i­mous­ly on both sides.

Sanofi brings proven ca­pa­bil­i­ties and a glob­al in­fra­struc­ture, which we be­lieve will help to more rapid­ly ex­pand ac­cess to our med­i­cines glob­al­ly and fur­ther our mis­sion of trans­form­ing the lives of peo­ple with rare blood dis­or­ders.

This deal could mark the long-await­ed start to a burst of M&A ac­tion, with No­vo Nordisk mak­ing a play for Abl­ynx as Cel­gene re­port­ed­ly hunts a deal to ac­quire Juno Ther­a­peu­tics while Bio­gen and UCB re­port­ed­ly joined the hunt for a bad­ly dam­aged Acor­da. Those deals, like this one, were first re­port­ed by the Wall Street Jour­nal.

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2021 saw a record $600B in healthcare M&A activity. In 2022, there is an anticipated slowdown in activity, however, M&A prospects remain strong in the medium to long-term. What are future growth drivers for the healthcare sector? Where might we see innovations that drive M&A? RBC’s Andrew Callaway, Global Head, Healthcare Investment Banking discusses with Vito Sperduto, Global Co-Head, M&A.

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Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

A return to in-person conferences also marks a return to on-the-ground reporting. My colleagues Beth Synder Bulik and Nicole DeFeudis were on-site at Cannes Lions, bringing live coverage of pharma’s presence at the ad festival — accompanied by photos from Clara Bui, our virtual producer, that bring you right to the scene. You can find a recap (and links to all the stories) below.

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