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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