Shire plc (LSE:SHP; NASDAQ:SHPG) fell $14.48 to $253.60 on NASDAQ after disclosing that it made an unsolicited offer to acquire Baxalta Inc. (NYSE:BXLT) in an all-stock transaction valued at about $30 billion. Shire CEO Flemming Ornskov said on a conference call that the deal would create a leading rare disease company and allow Shire to increase its 2020 sales target to $20 billion post-merger from $10 billion as a standalone entity, with 65% of sales coming from rare disease products (see BioCentury, June 30, 2014).
Shire said it proposed the deal on July 10, but Baxalta management declined to engage in discussions. Baxalta confirmed it had received the offer, but rejected it because it "significantly undervalues Baxalta and its attractive prospects for growth and value creation" and would be "severely disruptive at this very early stage of Baxalta's existence as a public company."
Under the proposal, Shire would offer 0.1687 Shire ADRs for each Baxalta share, giving an implied value of $45.23 per Baxalta share. The price is a 36% premium to Baxalta's close of $33.15 on Monday, the day before the offer was disclosed. Baxalta shareholders would own about 37% of the combined company.
Shire said the deal would generate double-digit top-line growth and be neutral to non-GAAP EPS after the first year and accretive thereafter. Ornskov said the combined company would also have significant operating and manufacturing synergies, along with a projected tax rate of 16-17% in 2017. Shire said that should the deal be completed, the combined company would immediately start a two-year share buyback program to repurchase 13% of combined outstanding shares.
On the analyst call, Ornskov said the deal would combine complementary rare disease portfolios and pipelines. Baxalta said in May it expects its hemophilia and immunology products to generate about $5.9 billion in 2015 sales. Its cancer pipeline includes marketed drug Oncaspar pegasparagase for acute lymphoblastic leukemia (ALL), one program in registration and three in Phase III testing. Shire markets Orphan enzyme replacement therapies and Orphan products for gastrointestinal diseases, and has a hereditary angioedema (HAE) franchise in immunology as well as an ADHD franchise.
Baxalta said it had responded to Ornskov in a letter that reads: "[W]e do not believe that a combination of our two companies would be strategically complementary, or that our respective product portfolios would benefit from such a combination. And we do not think the combination would generate substantial operational or revenue synergies, which would be critical to any potential value creation for our shareholders."
Shire said it would expect at least 30 new product launches by 2020 from the combined pipeline with sales of up to $5 billion from new products.
Baxalta was up $3.95 (12%) to $37.10 on Tuesday. Shire was off 335p to 5,395p in London.
Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) rose $26.67 to $580.94 on Tuesday after reporting $655 million in U.S. sales of Eylea aflibercept in 2Q15, up 58% from $415 million in 2Q14. On the earnings call, SVP Commercial Robert Terifay attributed much of the growth to uptake in diabetic macular edema (DME) patients. FDA approved Eylea in July 2014 to treat DME and in March 2015 to treat diabetic retinopathy in DME patients.
The company raised its 2015 Eylea U.S. net sales growth guidance to 45-50% from 30-35%. Bayer (Xetra:BAYN) has ex-U.S. rights to the human fusion protein that binds all forms of VEGF-A and placental growth factor (PGF; PlGF).
Terifay also said Regeneron plans to offer PCSK9 inhibitor Praluent alirocumab for free to patients awaiting an insurance coverage decision while commercial and government payers review their formularies and finalize reimbursement plans. Terify said the process may delay recording of commercial sales, and cautioned that Praluent's "performance cannot be judged" based on initial reported sales. FDA approved Praluent last month; Regeneron shares rights to the drug with Sanofi (Euronext:SAN; NYSE:SNY) (see BioCentury Extra, July 24).
Regeneron reported total product revenues of $999 million in 2Q15, up 50% from $666 million in 2Q14 and above the Street's estimate of $887.7 million. The company reported diluted non-GAAP EPS of $2.89, up 17% from $2.47 in 2Q14 and beating the consensus estimate of $2.77.
FDA plans to update the label of multiple sclerosis (MS) drug Gilenya fingolimod from Novartis AG (NYSE:NVS; SIX:NOVN) to include one definite case and one probable case of progressive multifocal leukoencephalopathy (PML) reported in Gilenya-treated patients. The agency said these are the first reported cases of PML in MS patients receiving Gilenya who had not been previously treated with an immunosuppressant drug.
In August 2013, FDA investigated a case of PML reported in a patient treated with Gilenya. The case was not "conclusively linked" to Gilenya because the patient had been treated with an immunosuppressant drug prior to receiving Gilenya, as well as repeated courses of high-dose corticosteroids over the course of the disease (see BioCentury Extra, Aug. 29, 2013).
Novartis reported $700 million in Gilenya sales in 2Q15.
Sanofi (Euronext:SAN; NYSE:SNY) and Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) filed an inter partes review (IPR) petition and a lawsuit last week challenging two Cabilly patents from the Genentech Inc. unit of Roche (SIX:ROG; OTCQX:RHHBY) and the City of Hope (Duarte, Calif.).
Sanofi and Regeneron said they filed their suit in response to the "imminent threat of a lawsuit" by Genentech for infringement. Both Cabilly patents, which cover methods of antibody production, have been the target of several district court suits.
The IPR filed last week challenges Cabilly II (U.S. Patent No. 6,331,415), which expires in 2018. The petition argues the patent's claims were anticipated in prior art. In 2009, the U.S. Patent and Trademark Office confirmed the patentability of all claims in Cabilly II after a re-examination proceeding (see BioCentury Extra, Feb. 24, 2009).
In their suit, filed in the U.S. District Court of the Central District of California Western Division, Sanofi and Regeneron seek declaratory judgment that Cabilly III (U.S. Patent No. 7,923,221) is invalid, unenforceable and not infringed by Praluent alirocumab. FDA approved the PCSK9 inhibitor last month to treat high cholesterol.
Sanofi and Regeneron said claims in Cabilly III were unpatentable on the grounds of obviousness and double-patenting. Cabilly III is a continuation of Cabilly II and also expires in 2018.
The complaint noted that Genentech has "aggressively enforced" its Cabilly patents and has previously alleged infringement of the Cabilly III patent by mAbs from Bristol-Myers Squibb Co. (NYSE:BMY), Eli Lilly and Co. (NYSE:LLY) and GlaxoSmithKline plc (LSE:GSK; NYSE:GSK). BMS and Lilly each agreed with Genentech earlier this year to dismiss their cases. GSK settled with Genentech in 2012 (see BioCentury Extra, March 27, 2012).
Genentech spokesperson Susan Willson said the company remains "confident in the validity of the Cabilly patents" and believes that "the challenges are without merit."
Celgene Corp. (NASDAQ:CELG) exercised its option to license exclusive, worldwide rights to oncology candidate GI-6207 from GlobeImmune Inc. (NASDAQ:GBIM). The therapy targets cancers that express carcinoembryonic antigen (CEA). GlobeImmune expects results in 2H16 from a Phase II trial to treat medullary thyroid cancer (MTC).
GlobeImmune will receive a $1.9 million option fee and is eligible for undisclosed regulatory and sales milestones, plus royalties. GlobeImmune declined to disclose further financial details; Celgene did not respond to inquiries.
Celgene acquired the option in a 2009 deal in which it paid GlobeImmune $40 million up front and received an equity stake. In 2013, Celgene licensed another GlobeImmune candidate, GI-6301, which is in a Phase II trial to treat chordoma (see BioCentury Extra, May 15, 2009).
GlobeImmune develops Tarmogens, recombinant yeast cells that express antigens and stimulate an immune response. GI-6207 and GI-6301 are Tarmogens comprising heat-inactivated Saccharomyces cerevisiae that express CEA and brachyury protein, respectively.
GlobeImmune gained $0.35 (17%) to $2.47 on Tuesday.
Diagnostic play Endocyte Inc. (NASDAQ:ECYT) named Alison Armour CMO. Armour was VP of oncology at GlaxoSmithKline plc (LSE:GSK; NYSE:GSK).
Drug delivery company Sagent Pharmaceuticals Inc. (NASDAQ:SGNT) named Allan Oberman CEO. Oberman was president and CEO of Teva Americas Generics, a subsidiary of Teva Pharmaceutical Industries Ltd. (NYSE:TEVA).
Antibody play CytomX Therapeutics Inc. (South San Franciso, Calif.) promoted Debanjan Ray to SVP of corporate development and strategy from VP of business development and alliance management.
Diagnostic play T2 Biosystems (NASDAQ:TTOO) named Maurice Castonguay CFO. Castonguay was SVP and CFO of Sonus Networks Inc.
Ophthalmology company Akorn Inc. (NASDAQ:AKRX) named Randall Pollard interim CFO and chief accounting officer, replacing former CFO and SVP Timothy Dick. Pollard was VP and corporate controller at the Sandoz division of Novartis AG (NYSE:NVS; SIX:NOVN).
Neurology play Bionomics Ltd. (ASX:BNO; OTCQX:BMICY) named Tony Colasin CBO. Colasin was VP of corporate development at Ironwood Pharmaceuticals Inc. (NASDAQ:IRWD).
The Biotechnology Industry Organization (BIO) promoted Jeanne Haggerty to SVP from VP of federal government relations.
Intec Pharma Ltd. (Tel Aviv:INTP; NASDAQ:NTEC) held at $6 in its first day of trading on NASDAQ after it raised $30.2 million through the sale of 5 million shares at $6 in a U.S. listing underwritten by Maxim Group and Roth Capital Partners.
The price values the company at $63.8 million. Intec filed in June to raise up to $46 million.
Intec develops oral formulations of existing drugs using specialized gastric release mechanisms. The company said it would use the funds to conduct a Phase III trial of Accordion Pill Carbidopa-Levodopa (AP-CDLC) to treat Parkinson's disease (PD). The lead candidate is a gastric retention formulation of carbidopa and levodopa.
Intec shares were unchanged at NIS28 on no volume in Tel Aviv on Tuesday.
The Rodman & Renshaw unit of H.C. Wainwright & Co. hired Raghuram Selvaraju as managing director in equity research. Selvaraju was a senior biotechnology analyst at MLV.
China FDA released a draft of new drug review initiatives aimed at speeding the review process for marketing applications and reducing application backlogs. According to Sidley Austin LLP, the proposed initiatives would create a separate pathway for CFDA to review pediatric drugs and applications undergoing concurrent review in the U.S. and EU, and create more stringent requirements for generic drug applications.
The firm, which specializes in Asia-Pacific life sciences law, said CFDA's proposed initiatives would include expedited review of drugs addressing urgent clinical needs and whose patents expire soon.
The draft initiatives would also require generic drug applications to demonstrate equivalence to innovator drugs. Applications limited to changes in dosage or route of administration of an approved drug must be deemed innovative and superior to approved formulations.
The draft policy is open for public comment until Aug. 15.
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