Our Take: Big-name drugmakers make billion-dollar deals; digital ‘unicorn’ once worth $1.5 billion goes for $15 million
Some of the biggest names in the pharmaceutical industry were involved in a handful of newsworthy acquisitions and expanded collaboration agreements last week ranging in value from $15 million to more than $6 billion.
The week’s largest deal was Johnson & Johnson (J&J)’s definitive agreement to acquire Cambridge, Mass.-based Momenta Pharmaceuticals in an all-cash transaction valued at approximately $6.5 billion. Through the acquisition, J&J’s Janssen Pharmaceutical Cos. will gain the global rights to nipocalimab, a potential best-in-class investigational treatment Momenta has been developing for autoantibody-driven autoimmune diseases.
J&J will pay $52.50 per share for Momenta, representing a 70% premium to the stock’s closing price on Aug. 18, the day before the deal was announced. The transaction was approved by both companies’ boards and is subject to customary closing conditions. It is expected to close before the end of the year.
Like J&J, Sanofi also took a step to increase its stake in the area of immune-mediated diseases by entering into a definitive agreement to buy South San Francisco-based Principia Biopharma. The French pharma powerhouse will pay $100 per share in cash for Principia’s outstanding shares, for a total of approximately $3.68 billion, according to Sanofi’s press release. The boards of both companies unanimously approved the transaction, which is expected to close in the fourth quarter, if all of the usual closing conditions have been met.
Sanofi and Principia formed a collaboration in 2017 centering on a “brain-penetrant” BTK inhibitor Principia is developing as a treatment for multiple sclerosis and other central nervous system diseases. Principia’s pipeline includes two other BTK inhibitors: rilzabrutinib, an oral drug being evaluated for various diseases such as pemphigus, immune thrombocytopenia, and IgG4-related diseases, and a topical agent that is being assessed in Phase I trials for immune-mediated diseases that might benefit from localized application to the skin.
Gilead Sciences has made headlines lately for its experimental COVID-19 treatment, remdesivir, but the Foster City, Calif.-based biopharmaceutical firm made news last Monday for expanding its collaboration with Tango Therapeutics, a biotech firm based in Cambridge, Mass., that focuses on “targeted immune evasion therapies for patients with cancer.” The two companies entered into the original agreement in 2018; the expanded collaboration increases the number of novel immune evasion targets from five to 15.
Under the expanded agreement, Gilead will pay Tango Therapeutics $125 million up front and make an equity investment in Tango of $20 million. In return, Gilead will have the rights to opt in to programs directed at the 15 targets for seven years. Tango could receive up to $410 million per program, giving the expanded agreement a potential value of more than $6.1 billion.
Meanwhile, to reduce the additional debt Takeda Pharmaceutical incurred with the $62 billion purchase of Shire Pharmaceuticals in early 2019, the Japanese drugmaker plans to sell its domestic over-the-counter franchise to Blackstone Group, a U.S. private equity firm, for a sum ranging from $2.37 billion to $2.85 billion. Takeda and Blackstone are expected to finalize the agreement by the end of the month. This would be the last piece of Takeda’s intended $10 billion divestiture, according to FiercePharma.
And it looks as though Otsuka Pharmaceutical will end up buying Redwood City, Calif.-based “smart pill” maker Proteus Digital Health for $15 million. The two companies have a history together that goes back to July 2012, when they signed a license and collaboration agreement for Proteus’ sensor technology. Otsuka terminated the expanded collaboration agreement with Proteus in January of this year after Proteus failed to raise additional funding, but the Japanese firm remained Proteus’ largest shareholder, owning nearly 20% of Proteus’ outstanding senior preferred shares.
As we reported previously, Proteus, a digital “unicorn” once valued at $1.5 billion, filed for Chapter 11 bankruptcy in June. When the U.S. unit of Otsuka made a ‘stalking horse’ offer to buy Proteus’ assets as part of the bankruptcy proceedings, a group of Proteus’ other investors, which included Novartis, objected and asked the court to delay the sale for at least 90 days — but the court approved the sale last week.
Irving, Texas-based McKesson Corp. has been chosen as a ‘central distributor’ for COVID-19 vaccines after they have been approved, Dr. Robert Redfield, director of the Centers for Disease Control and Prevention (CDC), said in a news release issued by the Department of Defense (DOD). The release noted that the CDC is executing an option in a contract that McKesson was awarded in 2016 as part of a competitive bidding process. While the contract is for children’s vaccines, the option expands McKesson’s distribution services to include pandemic-related vaccines. McKesson distributed a vaccine for the H1N1 influenza virus outbreak in 2009-2010. Citing a federal spending database as the source, Bloomberg reported that the contract could be worth more than $300 million to McKesson.
Cleveland Clinic and Aetna will form a new accountable care organization together and launch a commercial co-branded insurance plan called the Aetna Whole Health – Cleveland Clinic plan. Cleveland Clinic said in a press release that Aetna members enrolled in the new co-branded plan can receive care from physicians in the health system’s Quality Alliance network or at any Cleveland Clinic facility. The health system will be rewarded for attaining quality and cost targets. According to the release, fully insured and self-insured employers in 10 northeast Ohio counties can purchase the co-branded plan starting this fall and could save up to 10% in health care spending in comparison with a current Aetna broad network plan. The organizations are also expanding their collaboration nationwide with two objectives in mind: to offer Aetna’s commercial plan members access to virtual second opinions from Cleveland Clinic providers for certain conditions, and to launch a Cardiac Center of Excellence program that will offer Aetna plan sponsors cardiac care at Cleveland Clinic.
Beaumont Health’s board of trustees postponed its vote on the proposed merger with Advocate Aurora Health after receiving the results of a survey taken by 1,555 of Beaumont’s 5,000 physicians. The Detroit News reported last week that a majority of the physicians who took the survey indicated both a lack of confidence in Beaumont’s leadership and opposition to the merger. The board said it would meet with physicians, employees, and community leaders to hear their concerns. The Southfield, Mich.-based health system signed a nonbinding letter of intent in June to merge with Advocate Aurora, which has 26 hospitals and dual headquarters in Wisconsin and Illinois. Beaumont has eight hospitals in Michigan, as well as approximately 150 other sites of care.
Foundation Medicine is partnering with OneOncology to advance precision oncology in community cancer care through comprehensive genomic profiling and research. The companies, based in Cambridge, Mass., and Nashville, Tenn., respectively, said in a press release that the partnership “will empower OneOncology’s nearly 170 community oncology care sites to better drive personalized treatment plans, inclusive of targeted therapies, immunotherapies, and clinical trials.”
Anthem and Quest Diagnostics are collaborating on outcomes-based programs through a new partnership they announced last Monday. The programs will launch in 12 states across the country and will focus on increasing efficiency in care delivery, creating price transparency, reducing overall costs, and enhancing consumer engagement.
Mike Cotton will become the new CEO and president of SelectHealth, Intermountain Healthcare’s subsidiary health plan, in mid-November. Patricia Richards currently serves in both roles and will retire on Aug. 31. Bert Zimmerli, Intermountain’s executive vice president and chief financial officer, will take over the roles on an interim basis. Cotton has been CEO of Providence Health Plan since 2015.