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2020-12-13| M&A

AstraZeneca to Acquire Alexion for US$ 39 Billion to Grow Immunology Pipeline

by Rajaneesh K. Gopinath
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On December 12th, British pharma giant AstraZeneca announced that it has entered into a definitive agreement to acquire Boston-based Alexion Pharmaceuticals Inc., for a deal worth US$ 39 billion ($175 per share), paying a 45% premium on the latter’s closing stock price on Friday.

Up until this announcement, Gilead’s 21 billion dollar buy of Immunomedics was the biggest acquisition of 2020, a year that hardly witnessed any major pharma M&A, owing to the COVID-19 pandemic. For most of this year, AstraZeneca itself was on the headlines for the COVID-19 vaccine candidate it is developing with the University of Oxford. As per the agreement, for each share of Alexion, its shareholders will be paid $60 in cash and 2.12 American Depositary Shares (ADSs) of AstraZeneca—with each ADS representing one-half of one ordinary AstraZeneca share.

Speaking to reporters, Pascal Soriot, Chief Executive Officer of AstraZeneca, said this is “an important step in the history of the company.” He added that “it’s a tremendous opportunity for us to accelerate our development of immunological therapies.”

 

What’s in it for AstraZeneca?

AstraZeneca built its empire via its product sales in cardiovascular, respiratory, renal, and metabolism fields. However, since Soriot was appointed CEO in 2012, it has performed exceedingly well in oncology. In 2014, when Pfizer approached with a whopping $118 billion takeover deal, AstraZeneca’s board of directors declined the offer. One of the factors that influenced the decision was Soriot’s projection that company sales would hit $45 billion in 2023.

Although AstraZeneca hasn’t yet fulfilled the yearly growth milestones to attain that goal, its cancer drugs’ performance has been promising. Its top-selling NSCLC drug, Tagrisso, raked in more than US$ 3.2 billion in sales last year. According to SVB Leerink analyst Andrew Berens, that number could potentially catapult to US$ 16 billion if the drug enjoys global regulatory successes in the adjuvant setting. Moreover, its immunotherapy drug, Imfinzi, and PARP inhibitor, Lynparza, have risen to take the next two spots in oncology product sales, bringing in US$ 1.48 billion and US$ 1.28 billion respectively in 2020 (as of Q3).

AstraZeneca has only recently increased its efforts in immunology research. In fact, its previous immunology drugs such as Symbicort and Fasenra are products of its respiratory disease pipelines. Earlier this year, it recovered brazikumab, an IL-23 targeting monoclonal antibody from Allergan. It also has advanced AZD7442, a Long-Acting AntiBody (LAAB) combination for the treatment of COVID-19. The Alexion deal will help AstraZeneca enter the rare disease market besides establishing its presence in immunology. The company said it intends to establish a headquarters for rare diseases in the Boston area with this acquisition.

AstraZeneca will gain access to Alexion’s top-selling drugs, Soliris, and Ultomiris approved for treating rare blood disorders, namely paroxysmal nocturnal hemoglobinuria (PNH), and atypical hemolytic uremic syndrome (aHUS). Soliris and Ultomiris cost around US$ 6,819.51 and US$ 6,695.28, respectively, for a 30 ml intravenous shot of 10mg/ml concentration. Despite the high price, Soliris’ sales have increased over the years. In 2019, it made US$ 3,946.4 million out of Alexion’s total revenue of US$ 4,990.0 million. Ultomiris is poised to take over that position in a few years and is presently also evaluated in a Phase 3 trial for severe COVID-19.

“Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases. This acquisition allows us to enhance our presence in immunology,” said Pascal Soriot, Chief Executive Officer of AstraZeneca. “We look forward to welcoming our new colleagues at Alexion so that we can together build on our combined expertise in immunology and precision medicines to drive innovation that delivers life-changing medicines for more patients.”

 

What’s in it for Alexion?

Founded in 1992 by Steven Squinto and Leonard Bell, Alexion found prominence in the rare disease field, especially after Soliris’ FDA approval in 2007. The company has made several acquisitions over the years, the recent one being Portola Pharmaceuticals for US$ 1.44 billion. However, Elliott Management Corporation, a stakeholder of Alexion since 2017, has criticized its business strategy and acquisitions for quite some time. When Alexion’s stocks plummeted following its acquisition of Portola, the hedge fund once again pressured the company to sell itself. Besides, it suffered a blow early this year when the Securities and Exchange Commission (SEC) charged the company with Foreign Corrupt Practices Act (FCPA) violations for using questionable practices to boost Soliris’ sales in Turkey and Russia.

AstraZeneca’s offer would allow shareholders to overcome the setbacks and flourish under a pharma giant’s posession. The acquisition is expected to close in the third quarter of 2021, and Alexion shareholders will own 15 percent of the combined company after the deal.

“For nearly 30 years, Alexion has worked to develop and deliver transformative medicines to patients around the world with rare and devastating diseases. I am incredibly proud of what our organization has accomplished and am grateful to our employees for their contributions,” said Ludwig Hantson, Ph.D., Chief Executive Officer of Alexion. “This transaction marks the start of an exciting new chapter for Alexion. We bring to AstraZeneca a strong portfolio, innovative rare disease pipeline, a talented global workforce, and strong manufacturing capabilities in biologics”.

By Rajaneesh K. Gopinath, Ph.D.

Related Article: Hoping to Boost Revenue Growth, Gilead Acquires MYR in a $1.4 B Deal

References
  1. https://www.astrazeneca.com/media-centre/press-releases/2020/astrazeneca-to-acquire-alexion.html
  2. https://www.forbes.com/sites/johnlamattina/2018/10/23/in-2014-they-battled-for-control-now-pfizers-read-and-astrazenecas-soriot-in-different-places/?sh=4835d31f5bc1
  3. https://www.bloomberg.com/news/articles/2020-12-13/astra-plots-post-covid-future-with-39-billion-alexion-deal?utm_source=google&utm_medium=bd&cmpId=google
  4. https://www.businesswire.com/news/home/20200512005495/en/Elliott-Advisors-Sends-Letter-to-Board-of-Directors-of-Alexion
  5. https://www.sec.gov/news/press-release/2020-149

 

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