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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Biohaven is at risk of making a habit of disappointing its investors. 

Late Friday the biotech $BHVN reported that the FDA had rejected its application for riluzole, an old drug that they had made over into a sublingual formulation that dissolves under the tongue. According to Biohaven, the FDA had a problem with the active ingredient used in a bioequivalence study back in 2017, which they got from the Canadian drugmaker Apotex.

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Medicxi is rolling out its biggest fund ever to back Eu­rope's top 'sci­en­tists with strange ideas'

Francesco De Rubertis built Medicxi to be the kind of biotech venture player he would have liked to have known back when he was a full time scientist.

“When I was a scientist 20 years ago I would have loved Medicxi,’ the co-founder tells me. It’s the kind of place run by and for investigators, what the Medicxi partner calls “scientists with strange ideas — a platform for the drug hunter and scientific entrepreneur. That’s what I wanted when I was a scientist.”

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Af­ter a decade, Vi­iV CSO John Pot­tage says it's time to step down — and he's hand­ing the job to long­time col­league Kim Smith

ViiV Healthcare has always been something unique in the global drug industry.

Owned by GlaxoSmithKline and Pfizer — with GSK in the lead as majority owner — it was created 10 years ago in a time of deep turmoil for the field as something independent of the pharma giants, but with access to lots of infrastructural support on demand. While R&D at the mother ship inside GSK was souring, a razor-focused ViiV provided a rare bright spot, challenging Gilead on a lucrative front in delivering new combinations that require fewer therapies with a more easily tolerated regimen.

They kept a massive number of people alive who would otherwise have been facing a death sentence. And they made money.

And throughout, John Pottage has been the chief scientific and chief medical officer.

Until now.

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Norbert Bischofberger. Kronos

Backed by some of the biggest names in biotech, Nor­bert Bischof­berg­er gets his megaround for plat­form tech out of MIT

A little over a year ago when I reported on Norbert Bischofberger’s jump from the CSO job at giant Gilead to a tiny upstart called Kronos, I noted that with his connections in biotech finance, that $18 million launch round he was starting off with could just as easily have been $100 million or more.

With his first anniversary now behind him, Bischofberger has that mega-round in the bank.

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Chas­ing Roche's ag­ing block­buster fran­chise, Am­gen/Al­ler­gan roll out Avastin, Her­ceptin knock­offs at dis­count

Let the long battle for biosimilars in the cancer space begin.

Amgen has launched its Avastin and Herceptin copycats — licensed from the predecessors of Allergan — almost two years after the FDA had stamped its approval on Mvasi (bevacizumab-awwb) and three months after the Kanjinti OK (trastuzumab-anns). While the biotech had been fielding biosimilars in Europe, this marks their first foray in the US — and the first oncology biosimilars in the country.

Seer adds ex-FDA chief Mark Mc­Clel­lan to the board; Her­cules Cap­i­tal makes it of­fi­cial for new CEO Scott Bluestein

→ On the same day it announced a $17.5 million Series C, life sciences and health data company Seer unveiled that it had lured former FDA commissioner and ex-CMS administrator Mark McClellan on to its board. “Mark’s deep understanding of the health care ecosystem and visionary insights on policy reform will be crucial in informing our thinking as we work to bring our liquid biopsy and life sciences products to market,” said Seer chief and founder Omid Farokhzad in a statement.

Daniel O'Day

No­var­tis hands off 3 pre­clin­i­cal pro­grams to the an­tivi­ral R&D mas­ters at Gilead

Gilead CEO Daniel O’Day’s new task hunting up a CSO for the company isn’t stopping the industry’s dominant antiviral player from doing pipeline deals.

The big biotech today snapped up 3 preclinical antiviral programs from pharma giant Novartis, with drugs promising to treat human rhinovirus, influenza and herpes viruses. We don’t know what the upfront is, but the back end has $291 million in milestones baked in.

Vas Narasimhan, AP Images

On a hot streak, No­var­tis ex­ecs run the odds on their two most im­por­tant PhI­II read­outs. Which is 0.01% more like­ly to suc­ceed?

Novartis CEO Vas Narasimhan is living in the sweet spot right now.

The numbers are running a bit better than expected, the pipeline — which he assembled as development chief — is performing and the stock popped more than 4% on Thursday as the executive team ran through their assessment of Q2 performance.

Year-to-date the stock is up 28%, so the investors will be beaming. Anyone looking for chinks in their armor — and there are plenty giving it a shot — right now focus on payer acceptance of their $2.1 million gene therapy Zolgensma, where it’s early days. And CAR-T continues to underperform, but Novartis doesn’t appear to be suffering from it.

So what could go wrong?

Actually, not much. But Tim Anderson at Wolfe pressed Narasimhan and his development chief John Tsai to pick which of two looming Phase III readouts with blockbuster implication had the better odds of success.

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H1 analy­sis: The high-stakes ta­ble in the biotech deals casi­no is pay­ing out some record-set­ting win­nings

For years the big trend among dealmakers at the major players has been centered on ratcheting down upfront payments in favor of bigger milestones. Better known as biobucks for some. But with the top 15 companies competing for the kind of “transformative” pacts that can whip up some excitement on Wall Street, with some big biotechs like Regeneron now weighing in as well, cash is king at the high stakes table.

We asked Chris Dokomajilar, the head of DealForma, to crunch the numbers for us, looking over the top 20 deals for the past decade and breaking it all down into the top alliances already created in 2019. Gilead has clearly tipped the scales in terms of the coin of the bio-realm, with its record-setting $5 billion upfront to tie up to Galapagos’ entire pipeline.

Dokomajilar notes:

We’re going to need a ‘three comma club’ for the deals with over $1 billion in total upfront cash and equity. The $100 million-plus club is getting crowded at 164 deals in the last decade with new deals being added towards the top of the chart. 2019 already has 14 deals with at least $100 million in upfront cash and equity for a total year-to-date of over $9 billion. That beats last year’s $8 billion and sets a record.

Add upfronts and equity payments and you get $11.5 billion for the year, just shy of last year’s record-setting $11.8 billion.

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