By Marie Daghlian
Johnson & Johnson (JNJ) and Crucell (CRXL) are in advanced negotiations for the pharmaceutical giant to make a public offer for all outstanding shares of the Dutch vaccine maker. The potential deal is valued at $2.3 billion (€1.75 billion), which represents a purchase price of €25.75 per share, a 58 percent premium over Crucell’s closing price on September 16.
Crucell’s shares skyrocketed 58 percent on the announcement, the highest they have been in 10 years. The company is expected to urge shareholders to accept the offer. Johnson & Johnson acquired 17.9 percent of the company in a deal with the vaccine maker last year that brought the two companies together in an effort to develop a universal flu vaccine.
The global vaccine market reached $22.1 billion last year, up from $19 billion in 2008, and is expected to expand 9.7 percent annually in the next five years, according to a recent report from Kalorama, a market research company.
Vaccines are increasingly seen as a revenue generator for pharmaceutical companies seeking to replace revenue lost to patent expirations and generic competition.
Analysts don’t expect any opposition to the deal, who see the offer as a sweet premium for the company. The deal values Crucell at about 57 times 2010 estimated earnings, compared with a median multiple of about 36 times profit in biotechnology deals in the past year, according to Bloomberg analysis.
Crucell will be able to benefit from Johnson & Johnson's expertise and experience in the development and commercialization of pharmaceutical products, while Crucell's strength in the manufacture, discovery and commercialization of vaccines will create a strong platform for Johnson & Johnson in the vaccine market.
If the transaction goes through, Crucell will become the center for vaccines within the pharmaceutical’s group of business. Johnson & Johnson expects to keep the division intact and maintain its headquarters in Leiden, the Netherlands.
While no formal agreement has been reached, there is little doubt among investors and analysts that the deal will be completed, especially since Johnson & Johnson already owns a substantial portion of Crucell and the boards of both companies have authorized them to proceed with negotiations.
Johnson & Johnson’s potential acquisition of Crucell capped a busy week for life sciences deal making and financing that started with the announcement that Genzyme (GENZ) was selling its genetic testing business to LabCorp for $925 million in cash.
The sale follows Genzyme’s May announcement that it planned to seek strategic alternatives for three units as part of a five-year plan to increase shareholder value. Genzyme plans to use the proceeds from the sale of Genzyme Genetics to finance the second half of the company’s $2 billion stock buyback to be completed by May 2011.
Genzyme’s management has rejected a bid by Sanofi-Aventis (SNY) to acquire the company for approximately $17 billion as opportunistic and undervaluing the company’s resources. Sanofi’s bid for Genzyme has yet to go hostile.
One ongoing transaction did reached the “hostile” stage with Ramius, a private equity firm that holds a 10 percent stake in Cypress Biosciences (CYPB), deciding to take a sweetened offer directly to shareholders after management rejected a previous offer to buy the company. Shares of Cypress were up 9 percent as Ramius began a tender offer of $4.25 per share in cash, up from a prior offer of $4.00. The Cypress board is reviewing the current offer and has advised shareholders to take no action pending the review.
Ramius had been disappointed with how the company was being run, and shares were at a five-year low when it made its first offer in late July. That offer was soundly rejected by Cypress, which busied itself by entering into two deals to shore up its central nervous system pipeline—with Marina Biotech and Alexza Pharmaceuticals (ALXA).
Two significant renewable fuels partnerships were struck this week. Ocean Nutrition Canada, the world’s largest supplier of omega-3 fatty acid supplements, entered into a partnership with Canada’s National Research Council, military contractor Lockheed Martin (LMT), and technology company UOP to turn algae oil into green jet fuel.
Norway’s Statoil, one of the world’s largest offshore oil and gas producers, entered into a wide-ranging strategic partnership with Berkeley, California-based Bio Architecture Lab for the production of renewable fuels derived from macroalgae grown off the coast of Norway. BAL has extensive expertise growing algae off the coast of Chile and has also partnered with DuPont in a project funded by the U.S. Department of Energy’s Advanced Research Program to convert macroalgae into isobutanol.
|Deals for the Week Ending September 17, 2010|
|Global Venture Financings|
|Company||Location||Amount Raised (USD M))||Principal Focus|
|Relypsa||Santa Clara, CA||70.0||Non-absorbed polymeric drugs|
|Tryton Medical||Durham, NC||20.0||Medical devices-Stents|
|SG Biofuels||San Diego, CA||9.4||Renewable fuels|
|Fitbit||San Francisco, CA||8.0||Wellness monitoring|
|Lantos Technologies||Cambridge, MA||1.6||Ocular technology|
|SonarMed||Indianapolis, IN||1.0||Medical devices-Respiratory|
|Eddingpharm (Cayman)||Shanghai, China||24.0||Specialty pharma|
|RedHill Biopharma||Tel Aviv, Israel||3.5||Biopharmaceuticals|
|Total Raised US||110.0|
|Total Raised Non-US||48.1|
|Grants and Contracts|
|Company||Funding/Contracting Agency||Amount Raised (USD M)||Principal Focus|
|Fiberight-Blairstown||Iowa Power Board Fund||2.9||Renewable fuels|
|Applied Genetic Technologies||FDA||1.0||Drug delivery|
|New England Biolabs||Fast track SBIR||1.2||Epigenetics|
|PhysioNetics (ADA Technologies)||NIH NICHHD||0.8||Prosthetics|
|Inovio Pharmaceuticals||PATH Malaria Vaccine Initiative||N/A||DNA vaccines|
|Cleveland Biolabs||US DoD CBMS MITS||14.8||Radiation side effects|
|Total Grants and Contracts||28.0|
Raised (USD M)
|Addex Pharmaceuticals (Switzerland)||ADXN.SW||19.7||PIPE|
|Sunshine Heart (Australia)||ASX:SHC||14.7||PIPE|
|Aerocrine (Sweden)||STO:AEROB||31.9||New shares and bonds issued to Novo|
|TOTAL PUBLIC FINANCINGS-US||538.0|
|Acquirer||Target||Deal Value |
|Johnson & Johnson||Crucell (the Netherlands)||2,300.0||Vaccines|
|LabCorp||Genzyme Genetics (Genzyme)||925.0||Diagnostics|
|Public Investors||Cardinal Health||705.9||Medical devices|
|Proctor & Gamble||ConTipi (Israel)||100.0||Medical devices|
|William Demant (Denmark)||Otix Global||49.0||Otic solutions|
|Santarus||Covella Pharmaceuticals||1.8||Inflammatory; autoimmune|
|Vyteris||MediSync Bioservices||N/A||Drug development services|
|Biosystems International (France)||MicroBioChips (France)||N/A||Diagnostics|
|Company/Licensee||Company/Licenser||Deal Value |
|RTI Biologics||Athersys||37.5||Stem cell technology license|
|Monsanto||AgraQuest||N/A||Crop traits partnership|
|Biofortuna||TriLink BioTechnologies||N/A||Diagnostics license|
|Pfizer||Asklepios BioPharmaceutical||N/A||Technology license|
|Linnaeus Plant Sciences (Canada)||DuPont||N/A||Crop traits license|
|Santarus||Pharming (the Netherlands)||N/A||Cardiovascular drug commercialization|
|PMG Pharma (Chile)||Generex Biotechnology||N/A||Diabetes drug license and distribution|
|NewBridge Pharmaceuticals||Orexo (Sweden)||N/A||Pain drug license and distribution|
|Syngenta (Switzerland)||Chromatin||N/A||Crop technology license|
|Statoil (Norway)||Bio Architecture Lab||N/A||Renewable fuels partnership|
|Genmab (Denmark)||Seattle Genetics||N/A||Cancer drug license and collaboration|
|Proximagen Neuroscience (UK)||Ligand Pharmaceuticals||N/A||Preclinical drug target license|
|Acea Biosciences||Cellular Dynamics International||N/A||Diagnostics partnership|
|Company||University/Nonprofit||Deal Value |
|Geron||University Campus Suffolk (UK)||N/A||Stem cell collaboration|
|AB Sciex||University of Melbourne (Australia)||N/A||Drug development partnership|
|Merck||Beijing Genomics Institute (China)||N/A||Genomics collaboration|
|Oslo Cancer Cluster (Norway)||Shanghai Institute of materia Medica (SIMM-China)||N/A||Cancer therapeutics partnership|
|AstraZeneca (UK)||University College London's Institute of Ophthalmology (UK)||N/A||Stem cell partnership|