AstraZeneca to acquire Alexion bulking up rare disease portfolio

 

• Big pharma’s pivot to rare diseases continues as AstraZeneca (NASDAQ:AZN) acquires Alexion Pharmaceuticals (NASDAQ:ALXN) in a deal worth $39B.
• Subject to shareholder approval and certain regulatory clearances, the companies expect the deal to close in Q3 2021.
• The combined company is set to generate ~$500M of recurring run-rate of pre-tax synergies per year with full run-rate expected to be achieved by the end of the third year, following the closure of the acquisition.
• Under the terms of the agreement, the Alexion shareholders will receive $60 in cash and 2.1243 new AstraZeneca ADSs listed on the Nasdaq exchange for each of their Alexion shares. The consideration amounts to ~45% of premium to Alexion’s closing share price on Friday. AstraZeneca has entered into a bridge-financing facility to finance the deal.
• The duo will work together to build on ‘Alexion's pipeline of 11 molecules across more than 20 clinical-development programs across the spectrum of indications, in rare diseases and beyond’, a joint statement from the two companies said.
• With projections suggesting a low double-digit percentage of growth for the global market for rare diseases, Alexion’s specialty in rare and ultra-rare disease care has gained industry attention. Of over 7,000 rare diseases, only ~5% have FDA-approved therapies.
• Alexion’s portfolio includes Soliris (eculizumab), a first-in-class anti-complement component 5 (C5) monoclonal antibody approved for paroxysmal nocturnal haemoglobinuria, atypical haemolytic uremic syndrome, generalized myasthenia gravis, and neuromyelitis optica spectrum disorder.
• In the face of competition, the company has accelerated the conversion of its existing Soliris patient base to Ultomiris (ravulizumab) which has a more convenient dosing regimen. In less than two years, the second-generation C5 monoclonal antibody has achieved over 70% conversion for PNH in the U.S., Germany and Japan, Alexion’s key markets, accounting for two-thirds of its global revenue.
• The competitive threats had not slowed down the company’s top-line growth, reaching ~20.8% YoY growth in 2019, up from ~16.6% YoY growth four years ago. The cash and equivalents stood ~184.5% higher than the level in 2015, while net debt to EBITDA was negligible compared to ~2.6x five years ago.
• Yet, Alexion was trading at ~10.0x on a price to NTM earnings basis, less than half of its average over the last five years becoming a prime acquisition target amid activist pressure for a sale.
• https://seekingalpha.com/news/3643893-astrazeneca-to-acquire-alexion-bulking-up-rare-disease-portfolio