Amgen offers to swallow Denmark-based drug discovery partner in $167M deal
Amgen is offering to buy its Copenhagen-based partner Nuevolution — popular with Big Pharma leagues for its drug discovery engine — for about $167 million.
Nuevolution first tied up with the large US biotech in 2016 to work on finding fresh cancer and neuroscience drugs for Amgen, in a deal that made it eligible to receive up to $410 million in developmental milestones for any therapy that makes it across the finish line. In 2018, Amgen opted-in on two programmes and is now covering development costs, and can exercises its option to license the candidates.
Founded in 2001, Nuevolution is focused on small molecule drug discovery using its platform Chemetics, which has been endorsed by an array of collaborations, including Amgen, Almirall and J&J. The capital from these alliances — which has added up to SEK 530 million ($55 million) this far, according to Edison analysts — is fueling the development of Nuevolution’s in-house arsenal of preclinical drugs. In 2015, the company took itself public on the Swedish bourse with a small, but upsized, IPO that added $29.5 million to its coffers.
On Wednesday, Amgen $AMGN offered SEK 32.50 in cash per Nuevolution share — a premium of 169% to the Danish company’s Tuesday closing — which translates to approximately SEK 1,610 million, or $167 million, altogether.
Nuevolution’s board of directors unanimously recommended that the company’s shareholders accept the offer, which is expected to close on July 4. The three largest shareholders in Nuevolution (Sunstone, Skandinaviska Enskilda Banken AB and Industrifonden) — representing a combined 59% of the stock and votes in Nuevolution — have agreed to accept the offer, on the condition that Amgen’s offer is declared unconditional not later than 1 September 2019, the partners said in their separate releases.
Amgen has also sweetened the deal by offering Nuevolution’s full-time employees a “retention” deal to incentivize them to remain with the company following the potential takeover. The US drugmaker has also pledged to neither alter the composition of Nuevolution’s management team nor the locations it currently works in.
Historically, Amgen has reaped about half its revenue from its internal drug discovery effort, while the remainder emanated from the purchase of external drugs or drugmakers, and Amgen expects this practice to continue, Cowen’s Yaron Werber wrote in a note. “We envision that deal activity will be focused on oncology and inflammation and today’s announcement…is a step in that direction.”
Given the 2017 tax reform, Amgen also has about $26 billion in its coffers, which it can use to go shopping. The big California-based biotechnology company has suggested there are more deals in the early stages at attractive valuations, versus later stages, which tend to be overpriced based on risk vs return, Werber said.