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2020-11-03| M&A

Sanofi Offers to Buy Kiadis Pharma to Advance Immuno-Oncology Research

by Eduardo Longoria
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By Eduardo Longoria

Sanofi has made a deal with the Netherlands-based Kiadis Pharma to gain full control of an off-the-shelf natural killer (NK) cell platform it is currently using to try to enhance its multiple myeloma drug, Sarclisa. This deal comes with a price tag of €308 million ($358 million) and the full support of the Kiadis board. Sanofi is offering €5.45 a share (a price that is hasn´t traded at for upwards of a year).

In response to the takeover news, Kiadis’ shares jumped 235%, rising to close to Sanofi’s offer price. Sanofi believes the NK cell platform can support its aspirations to grow its presence in the field of immuno-oncology.

 

Kiadis’ Pipeline

To pursue its own goals for immuno-oncology, Kiadis executed an all-stock takeover of CytoSen Therapeutics after their plans for ATIR101 fell through last year. This acquisition allowed Kiadis to acquire an NK cell platform from CytoSen. Sanofi will now make good use of the platform in the near future.

“We believe the Kiadis’ ‘off the shelf’ K-NK cell technology platform will have broad application against liquid and solid tumors, and create synergies with Sanofi’s emerging immuno-oncology pipeline, providing opportunities for us to pursue potential best-in-disease approaches,” John Reed, global head of R&D at Sanofi, said in a statement.

Kiadis’ pipeline is led by K-NK002, an NK-cell therapy in Phase 2 trial intended to stop post-transplant relapse in patients with acute myeloid leukemia (AML) and myelodysplastic syndromes.

K-NK003 relies on NK cells that Kiadis is testing in relapsed or refractory AML patients in phase 1 and a post-exposure, preemptive COVID-19 therapy that is set to enter phase 1/2a. Sanofi will accelerate this program by providing Kiadis with additional resources.

Kiadis produces the product K-NK004 by modifying NK cells to prevent the expression of CD38 (a protein marker used for cancer prognostics). The combination of K-NK004 with Sarclisa is a potential rival to Johnson & Johnson’s Darzalex that could prevent the NK-cell depletion that lowers the effectiveness of anti-CD38 antibodies.

Finally, there is KNK-ID-101, a program evaluating the properties of K-NK (Natural Killer cells without the ability to express CD38) cells and their suitability to fight SARS-CoV-2 and the option to develop K-NK cells as a post-exposure pre-emptive therapy for COVID-19 in high-risk patients. Kiadis also plans to initiate a Phase 1/2a clinical trial evaluating the use of K-NK cells to treat COVID-19 patients with government grant funding.

 

Financial Outlook

In his address to the shareholders, Kiadis CEO Arthur Lahr said Sanofi’s offer is fair, given the capital needed to execute his plan and the risks of drug development.

This offer was also preceded by an investment back in July with Sanofi paying 17.5 million Euros in exchange for the global rights to preclinical prospect K-NK004. This, in addition to the 19.8 million Euros that Kiadis had in cash equivalents, indicates the sore need that Kiadis was in for funding if they wanted to continue with drug development.

In landing a €308 million bid from Sanofi, Kiadis has flipped the CytoSen assets at a sizable profit considering the price of 1.5 million newly issued shares, plus options, back when its stock traded above €7.

 

Moving into the Future

Sanofi’s willingness to pay the Offer Price is predicated on acquiring 100% of the Shares or the entirety of Kiadis’ assets and operations. Moelis & Company LLC is acting as exclusive financial advisor to Kiadis and has issued their opinion indicating the fairness of the deal. While Kiadis is enthusiastic about moving forward with the acquisition, Sanofi is enthusiastic about maintaining the executive team and not interrupt R&D operations in Amsterdam.

The acquisition shows that Sanofi has strong faith in Kiadis’ capabilities. Assuming that no superior offer is made (exceeding the Offer Price by at least 8% and the third-party offeror has conditionally committed itself to Kiadis), both firms will continue with the deal. Not only does Kiadis get to be acquired by an enthusiastic parent company, intent on encouraging its work, but they get to make out with a 30X pay off for their initial purchase of CytoSen.

Related Article: Why is PerkinElmer Buying Horizon Discovery?

References
  1. https://www.sanofi.com/en/media-room/press-releases/2020/2020-11-02-07-15-00

 

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