Be­hind the scenes of J&J’s $30B Acte­lion buy­out: Walk­outs, Sanofi’s blun­der and a $230M sweet­en­er

Sanofi may un­der­stand how to jump in­to a buy­out ne­go­ti­a­tion, but they still have a long way to go be­fore un­der­stand­ing how to close a big deal.

Joaquin Du­a­to (Cred­it: End­points News)

In a prospec­tus pub­lished ear­ly to­day, Acte­lion ex­plained how J&J’s Joaquin Du­a­to and Paul Stof­fels first broached a deal at the be­gin­ning of 2016, push­ing past a col­lab­o­ra­tion counter of­fer to ad­vance takeover talks right to the end of the year. And af­ter a tem­po­rary rup­ture, J&J came back to win the deal with a $30 bil­lion bid and a rich $230 mil­lion pact on an ex­per­i­men­tal ther­a­py that the Acte­lion board is spin­ning in­to a new com­pa­ny.

Last De­cem­ber, the French phar­ma gi­ant Sanofi was wide­ly iden­ti­fied as the big play­er that man­aged to push J&J away from ne­go­ti­a­tions that had ac­tu­al­ly be­gun at the start of 2016. Iden­ti­fied on­ly as Com­pa­ny A in J&J’s new­ly filed prospec­tus, Sanofi CEO Olivi­er Brandi­court came in with a high­er bid that J&J was un­will­ing to match. But af­ter J&J took its check­book and walked, Sanofi made a tac­ti­cal blun­der. From the prospec­tus:

Com­pa­ny A (Sanofi) in­di­cat­ed that it would on­ly be will­ing to pro­ceed with a trans­ac­tion on the ba­sis of a price low­er than its pre­vi­ous­ly com­mu­ni­cat­ed of­fer price and on dif­fer­ent terms, and that Com­pa­ny A had ex­ten­sive due dili­gence re­quests with re­spect to Acte­lion and its busi­ness. Lat­er that day, the Board of Di­rec­tors, with rep­re­sen­ta­tives of Nieder­er Kraft & Frey in at­ten­dance, con­sid­ered the nom­i­nal­ly high­er in­dica­tive price pro­posed by Com­pa­ny A, as well as the tenor and con­tent of man­age­ment’s meet­ings with Com­pa­ny A. Af­ter dis­cussing the sig­nif­i­cant un­cer­tain­ty pre­sent­ed by a po­ten­tial trans­ac­tion with Com­pa­ny A and the like­li­hood that a trans­ac­tion could ul­ti­mate­ly be reached with J&J at a de­sir­able price, the Board of Di­rec­tors au­tho­rized Mr. Gar­nier to re-en­gage with J&J be­cause the Board of Di­rec­tors con­sid­ered that this path was more like­ly to re­sult in a trans­ac­tion that would max­i­mize val­ue for Acte­lion and its share­hold­ers.

Even though the two fi­nal bids were al­most equiv­a­lent, Acte­lion de­cid­ed to stick with J&J CEO Alex Gorsky, who they trust­ed more, and Sanofi was shoved away for the last time. That was Sanofi’s sec­ond mis­take at the deal ta­ble. Pfiz­er had al­ready mus­cled past the com­pa­ny in its $14 bil­lion ac­qui­si­tion of Medi­va­tion.

In the end, Acte­lion split up the com­pa­ny, sell­ing the port­fo­lio of mar­ket­ed drugs while part­ner­ing on a pipeline that is spin­ning out in­to a new com­pa­ny with a bil­lion dol­lars in liq­uid­i­ty and some rich deal terms.

The prospec­tus al­so re­vealed that J&J has agreed to pay $230 mil­lion in cash to opt in on ACT 132577 — a metabo­lite of maci­ten­tan — at the end of an on­go­ing Phase II, pro­vid­ed they like the da­ta. If they do, then the two com­pa­nies will share de­vel­op­ment rights with a roy­al­ty for New­Co that starts at 20% and reach­es up to 35%.

As al­ready an­nounced, pones­i­mod and cada­zol­id, two late-stage pipeline prod­ucts, re­main with Acte­lion fol­low­ing the spin­out with a rev­enue shar­ing agree­ment in place with J&J.

5AM Ven­tures: Fu­el­ing the Next Gen­er­a­tion of In­no­va­tors

By RBC Capital Markets
With Andy Schwab, Co-Founder and Managing Partner at 5AM Ventures

Key Points

Prescription Digital Therapeutics, cell therapy technologies, and in silico medicines will be a vital part of future treatment modalities.
Unlocking the potential of the microbiome could be the missing link to better disease diagnosis.
Growing links between academia, industry, and venture capital are spinning out more innovative biotech companies.
Biotech is now seen by investors as a growth space as well as a safe haven, fuelling the recent IPO boom.

Biohaven CEO Vlad Coric (Photo Credit: Andrew Venditti)

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You know it’s bad when a biopharma player plucks out a subgroup analysis for a positive take — even though it was way off the statistical mark for success, like everything else.

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Andrew Allen, Gritstone CEO (Gritstone via website)

Grit­stone con­tin­ues Covid-19 push with deal to de­vel­op 'self-am­pli­fy­ing RNA' vac­cines, as shares con­tin­ue bal­loon­ing

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Pieris fi­nal­ly vaults FDA hold on next-gen sol­id tu­mor hunter, clear­ing the path for mid-stage tri­al

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The FDA slapped a partial hold on Pieris’ PRS-343 back in July, restricting the biotech from enrolling new patients in a Phase I trial. While Pieris was allowed to continue dosing patients who were already enrolled, the agency requested they conduct an additional “in-use and compatibility study” before recruiting any more.

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A month after filing the IND application for its human extracellular matrix designed to regenerate knee cartilage, Histogen has hit a roadblock.

The FDA on Tuesday verbally notified the San Diego-based biotech that it was placing a clinical hold on the planned Phase I/II clinical trial of HST-003 due to pending CMC information and additional questions needed to complete their review.

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Hal Barron, GSK R&D chief (GSK via YouTube)

Glax­o­SmithK­line's $4B bis­pe­cif­ic can­cer drug al­liance with Mer­ck KGaA hit by big set­back with a PhI­II fail­ure on NSCLC

Close to 2 years ago, GSK’s R&D team eagerly agreed to pay up to $4 billion-plus to ally itself with Merck KGaA on a mid-stage bispecific called bintrafusp alfa, which intrigued them with the combination of a TGF-β trap with the anti-PD-L1 mechanism in one fusion protein.

But today the German pharma company says that their lead study on lung cancer was a bust, as independent monitors said there was no reason to believe that the experimental drug — targeting PD-L1/TGF-Beta — could beat Keytruda.

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Janet Woodcock and Joshua Sharfstein (AP, Images)

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It’s time for a new FDA commissioner to come on board, a rite of passage for Joe Biden’s administration that should help seal the new president’s rep on seeking out the experts to lead the government over the next 4 years.

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