Seeking Alpha
Profile| Send Message|
( followers)  

By Marie Daghlian

The boards of Sanofi-Aventis (NYSE:SNY) and Genzyme (GENZ) finally reached agreement on deal terms for the French pharma to acquire the American biotech, seven months after Sanofi made its intention public. After looking at Genzyme’s books, Sanofi agreed to pay $74 per share in cash, or approximately $20.1 billion, a step up from its original $69 per share offer.

Sanofi also agreed to give each Genzyme shareholder one contingent value right for each share they own, which will entitle the holder to additional cash payments tied to specified milestones related to Genzyme’s Lemtrada, Cerezyme, and Fabrazyme. Most of the milestones are based on the success of Lemtrada as a treatment for multiple sclerosis, a drug Genzyme CEO Henri Termeer has claimed has the potential to be a blockbuster. If all milestones are met, it will add as much as $3.8 billion to the total price of the deal.

The CVRs will be publicly traded and could be worth as much as $14 per share if all milestones are met. The value of the CVRs are tied to one-time payments of $1 per CVR if specified production levels of Genzyme’s two main drug products—Cerezyme and Fabrazyme—are met in 2011; $1 per CVR upon final U.S. Food and Drug Administration approval of Lemtrada as a treatment for multiple sclerosis; $2 per CVR if net sales after Lemtrada’s launch exceed an aggregate of $400 million within specified periods per territory; $3 per CVR if Lemtrada’s global net sales exceed $1.8 billion; $4 per CVR if its global net sales exceed $2.3 billion; and $3 per CVR if global net sales exceed $2.8 billion. The CVR will terminate on December 31, 2020 or earlier if the fourth product sales milestone has been achieved.

Based on realistic assumptions, the deal will be worth $78 per share, Marc Booty, an investment manager for Pictet Asset Manager in London, told The New York Times.

The deal is expected to close early in the second quarter of 2011, subject to customary closing conditions, and is expected to be accretive to Sanofi’s net earnings per share in the first year following closing, and accretive to net earnings per share in the range of $1 to $1.40 per share by 2013.

The acquisition makes good on CEO Chris Viehbacher’s strategy of looking externally for innovation and diversifying its business. The deal is the second largest acquisition of a biotech deal after Roche’s (OTCQX:RHHBY) purchase of Genentech, according to data from Thomson Reuters. Sanofi plans to make Genzyme its global center for excellence in rare diseases and the acquisition will reinforce its commitment to the greater Boston area, where it already has a sizeable presence. Genzyme will retain its corporate brand.

Aveo Pharmaceuticals (NASDAQ:AVEO) signed a major cancer drug licensing deal with Astellas Pharma (OTCPK:ALPMF) that will net the biotech $125 million upfront and could be worth more than $1.3 billion if all milestones are met [See story]. The experimental drug, tivozanib, is currently in a late stage trial as a treatment for advanced renal carcinoma, and in other studies as a treatment for other solid tumors. It is designed to optimally block the VEGF pathway by inhibiting all three VEGF receptors, for the treatment of a broad range of cancers.

Astellas will pay Aveo $125 million upfront, which includes a $75 million license fee and $50 million in research and development funding. Aveo is also eligible to receive up to $1.3 billion in potential milestones that includes $575 million in clinical and regulatory milestones, as well as more than $780 million in commercial milestones. Subject to regulatory approval, Aveo will lead commercialization of tivozanib in North America and Astellas will lead commercialization of tivozanib in the European Union. The companies will share equally all North American and E.U. development and commercialization costs and profits for tivozanib. Astellas will be responsible for the development and commercialization costs of tivozanib outside of North America and European Union and will be obligated to pay Aveo a tiered, double-digit royalty on sales in those territories. Kyowa Hakko Kirin retains the rights to develop and commercialize tivozanib in Asia. Aveo will be responsible for the manufacturing of tivozanib.

DEALS FOR THE WEEK ENDING FEBRUARY 18, 2011

Global Venture Financings
Company Location Amount Raised (USD M) Principal Activity
Chimerix Durham, NC 45.0 Antivirals
Sonoma Orthopedic Products Santa Rosa, CA 22.0 Medical devices
Versartis Mountain View, CA 21.0 Endocrine
Conatus Pharmaceuticals San Diego, CA 20.0 Inflammation
Ivivi Health Sciences San Francisco, CA 9.5 Medical devices
Ze-Gen Boston, MA 8.0 Industrial/Ag
CalciMedica San Diego, CA 6.0 Autoimmune
Sermo Cambridge, MA 3.5 Digital Health
Mobius Therapeutics St Louis, MO 0.2 Ophthalmic
Diartis Pharmaceuticals Mountain View, CA N/A Metabolic
Cappella Galway, Ireland 14.3 Medical devices
Activaero Gemunden, Germany 6.8 Medical devices
OrganOx Oxford, UK 4.4 Diagnostics
Marvao Medical Devices Galway, Ireland 1.8 Medical devices
Ximmune Lund, Sweden 0.7 Infectious
Total Raised US 135.2
Total Raised Non-US 28.0
Grants and Contracts
Company Funding Agency Amount Raised (USD M) Principal Activity
Grant
Newron Pharmaceuticals Italian government innovation grant 5.0 CNS, pain therapeutics
Contracts
Aeolus Pharmaceuticals BARDA (Total award value $118 million over 5 years) 10.4 Radiation syndrome
Chimerix BARDA (Total award value $81.1 million over 3 years) 24.8 Antivirals, smallpox
Total Grants and Contracts 40.2
Public Financings
Company Ticker Amount
Raised (USD M)
Financing Type
K-V Pharmaceutical KVa 32.0 PIPE
Cell Therapeutics CTIC 25.0 PIPE
Fibrocell Science OTC:FCSC 7.8 PIPE
EpiCept EPCT 7.1 PIPE
NovaDel Pharma OTC:NVDL 1.6 PIPE
Radient Pharmaceuticals RPC 0.9 PIPE
Mesoblast (Australia) ASX:MSB 140.1 PIPE
e-Therapeutics (United Kingdom) AIM:ETX 28.5 Placing
Rosetta Genomics (Israel) ROSG 6.0 PIPE
Akers Biosciences (United Kingdom) LSE:AKR 3.2 Placing
Sareum Holdings (United Kingdom) LSE:SAR 0.8 Placing
Opexa Therapeutics OPXA 8.5 Follow on
Vermillion VRML 21.8 Follow on
Discovery Laboratories DSCO 23.5 Follow on
Impax Laboratories IPXL 50.0 Credit facility
Poniard Pharmaceuticals PARD 1.9 Equity-based line of credit
Somaxon Pharmaceuticals SOMX 15.0 Revolving credit line
Angiotech Pharmaceuticals (Canada) ANPI 28.0 Debtor-in-Possession credit facility
Total Public Financings-US 195.1
Total Public Financings-Non-US 206.6
M&A
Acquirer Target Deal Value
(USD M)
Focus
Sanofi Aventis (France) Genzyme 20,100 Biopharmaceuticals
BioTime Glycosan BioSystems N/A Tissue engineering
Adventrx SynthRx N/A Sickle cell vascular
PerkinElmer chemagen (Germany) N/A Tools/Technology
Alliances
Company/Licenser Company/Licensee Deal Value
(USD M)
Focus
PositiveID Connected Development N/A Digital Health partnership
InVivoScribe Technologies Novartis (Switzerland) N/A Companion diagnostic collaboration
Apricus Biosciences Neopharm Group (Israel) 4.4 Genitourinary drug license
Medivir (Sweden) Janssen Pharmaceuticals (J&J) N/A Infectious therapeutic collaboraion
Partners HealthCare Luminex N/A Personalized medicine collaboration
Covance; Quintiles Takeda Pharmaceutical (Japan) N/A Outsourcing partnership
AVEO Pharmaceuticals Astellas Pharma (Japan) 1,425.0 Cancer drug license
Emdeon LabCorp N/A EHR alliance
Biotica Technology (United Kingdom) Amyris N/A Technology license
Golden Meditech (China) Long Bon International (Taiwan) N/A Healthcare alliance
Xention (United Kingdom) Grunenthal (Germany) N/A Pain drug discovery agreement

Source: Sanofi Will Make Genzyme Its Rare Disease Center of Excellence: Latest Biotech Deals