M&A

J&J gets a $30B Actelion buyout and a new partner as Clozel’s team spins out with the pipeline

One of the big hurdles facing anyone who wanted to buy Actelion was finding a way to come up with an acceptable acquisition value for its pipeline, which was highly prized by its independent-minded management. So in the end, J&J got a buyout deal done by being creative, spinning out a big part of the pipeline, with Actelion’s team in charge, while grabbing rights to some prized late-stage assets for itself.

In a deal announced early this morning, J&J agreed to pay $30 billion for Actelion, acquiring an impressive portfolio that includes its blockbuster new flagship therapy for pulmonary arterial hypertension. But they’re spinning its discovery and early-stage experimental drugs into a new company — temporarily named R&D NewCo — while keeping a minority stake in the business.

Actelion CEO Jean-Paul Clozel will stay at the helm of the spinout, while chairman Jean-Pierre Garnier also retains his title in the new venture.

J&J is paying $280 a share in cash for the Swiss biotech and leaving R&D NewCo with a billion dollars in liquidity as it lists on the Swiss exchange. Actelion’s shareholders are gaining shares in the new company as a dividend. In addition to a slate of marketed drugs that includes Opsumit, Uptravi and the original, pioneering PAH drug Tracleer, J&J also gains global rights to ponesimod, an S1P1 receptor modulator in Phase III development for multiple sclerosis, along with cadazolid, a late-stage antibiotic in development for Clostridium difficile-associated diarrhea.

J&J’s Alex Gorsky

J&J also gains an option on the Phase II drug ACT-132577 for resistant hypertension. And the pharma giant keeps a 16% stake in its spinout, with a chance to double that amount through a convertible note.

The deal underscores the high premium that sought-after drug assets can command in this seller’s market. J&J is paying 21 times estimated 2020 earnings per share for the company, according to Bloomberg’s Sam Fazeli, a very steep price for a deal like this. It also highlights yet again how ineffective Sanofi has been in finding a major deal to help restructure the company as its diabetes franchise wanes. J&J essentially elbowed Sanofi aside, just as Pfizer did with Medivation.

J&J’s Alex Gorsky had this to say about the deal:

Adding Actelion’s portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products. We expect to leverage our established global presence and commercial strength to accelerate growth and patient access to these important therapies. Further, we believe R&D NewCo will be strongly positioned to continue Actelion’s legacy of innovation and look forward to collaborating on the development of cutting-edge new therapies.


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Biotech Primer Boston 2018

Private Equity Senior Associate
OrbiMed Advisors New York, NY
Business Development Manager
Novotech Boston, MA
Director, Cell MS&T
Adaptimmune Philadelphia, PA

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