M&A

Partnering talks led to Biogen’s $800M Nightstar buyout as players clustered around the hot deal table for gene therapies

Anyone looking for some insight into just how hot gene therapies have become should turn their attention today to the behind-the-scenes negotiations that went into Biogen’s $800 million deal to buy Nightstar Therapeutics $NITE.

David Fellows, Nightstar CEO

Over a period of 7 months, they held buyout and partnering talks with 4 different companies before Biogen $BIIB emerged as the winner — or at least the last one at the table talking M&A. During that time, Nightstar would paint a variety of potential futures for itself, topped by a bull argument that it could nail a $1.1 billion profit on $1.2 billion in sales come 2025.

The Nightstar acquisition came just weeks after Roche completed its deal for Spark Therapeutics, the US pioneer in high-priced gene therapies and another prime example that mainstream players are increasingly ready to buy up gene therapy assets in the clinic.

The profit forecasts help tell the story.

Even only a moderate success in Nightstar’s books, according to the proxy, would be close to $650 million at the peak, with $608 million in gross profit. And a bear case (which includes marketing approval) scraped around the $400 million level for sales and profits.

Even before their IPO in the fall of 2017, a new SEC filing reveals, Biogen and a couple of other players in the industry had been by to kick the tires and discuss strategic partnering ambitions with the executive team at Nightstar. Those talks were primarily about licensing NSR-REP1. Then in the summer of last year things began to heat up when CEO David Fellows fielded a call from Party A looking to do some due diligence on NSR-REP1 for choroideremia.

It was time to spread the word.

A few weeks later, Nightstar CFO Senthil Sundaram had a sit-down with Biogen VP Daniel Karp to discuss their mutual interest in gene therapies. Then David Mott, a general partner at NEA and member of the board, was chatting about “general strategic topics” when he picked up a signal from a certain Party B that they had an interest in the portfolio. Two months later, yet another group stepped up to discuss ophthalmology gene therapy.

The first hard offer came in December, when Party B anted up $20.50 a share — a 70% premium over its price at the time. And within a few weeks Biogen, B and C were all given the key to the electronic data room. Biogen followed up with a round offer of $19 to $21 a share, which opened the door on a second data vault, even though they said it was still too low.

By early February, though, A, B and C were all on the outside looking in, talking about a collaboration instead. Biogen stuck with the buyout talks, and came up with $25 a share.

How about $26.50, Nightstar countered. 

Biogen, though, would only move to $25.50 on March 2. They closed the deal March 4.

Image: AP


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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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