LONDON—AstraZeneca recently inked a definitive agreement with ZS Pharma to acquire the San Mateo, Calif.-based biopharmaceutical company. The deal is an all-cash tender offer for all outstanding shares of ZS Pharma common stock at $90 per share, followed by a merger in which all remaining shares not tendered to the offer would be converted into the same $90 cash per share consideration. The transaction will have an aggregate value of approximately $2.7 billion and is expected to close by the end of the year, subject to customary conditions, including the tender of a majority of ZS Pharma's outstanding shares and the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. ZS Pharma's board of directors unanimously approved the transaction.
ZS Pharma, which is applying its proprietary ion-trap technology to develop novel treatments for hyperkalemia—which is usually associated with chronic kidney disease (CKD) and chronic heart failure—brings with it ZS-9, a potassium-binding compound that could be a best-in-class treatment for the condition. The compound is in regulatory review by the U.S. Food and Drug Administration (FDA), and a submission for European Marketing Application authorization is planned by the end of this year. Should ZS-9 be approved, it's estimated that it could see global peak sales of more than $1 billion annually.
“Hyperkalemia can be a life-threatening condition for patients with chronic kidney disease and chronic heart failure; however, the risk is underappreciated and prevalence is increasing. This acquisition complements our strategic focus on cardiovascular and metabolic disease by adding a potential best-in-class treatment to our portfolio of innovative medicines. We look forward to welcoming the ZS Pharma team to AstraZeneca,” Pascal Soriot, CEO of AstraZeneca, said in a press release regarding the deal.
Following completion of the acquisition, ZS Pharma will become a wholly owned subsidiary of AstraZeneca. AstraZeneca does not expect the transaction to affect its financial guidance for 2015, and forecasts that the deal will cause minimal earnings dilution over 2016 and 2017 and become accretive to core earnings by 2018.
“This agreement will allow us to maximize the potential of ZS-9, drawing on AstraZeneca’s longstanding expertise in developing and commercializing medicines for cardiovascular and metabolic diseases,” Robert Alexander, CEO of ZS Pharma, commented in a statement. “We look forward to joining AstraZeneca and to working together to bring this important treatment for hyperkalemia to the global market, helping to meet an important unmet medical need for patients.”
Zacks Investment Research wrote in a analyst note Nov. 9 that this acquisition “is in sync with AstraZeneca’s strategy of boosting and strengthening its cardiovascular and metabolic disease portfolio and pipeline. AstraZeneca’s cardiovascular and metabolic disease portfolio currently consists of Brilinta/Brilique and Onglyza among other drugs while pipeline candidates include roxadustat (Phase 3—anemia associated with CKD) and others.
“The acquisition of ZS Pharma does not come as a surprise—the company was already being viewed as an attractive acquisition target. About a couple of months back, Actelion Ltd. had confirmed that it was in preliminary discussions with ZS Pharma with the intention of acquiring the latter. Mergers and acquisitions in the healthcare space show no signs of slowing down, and we expect to see even more buyouts through the remainder of the year and into 2016.”
Whether Actelion was outbid by AstraZeneca or simply lost interest in the acquisition is unknown.
“It makes sense with some of the opportunities they have in their own late-stage pipeline,” Johan Unnerus, an analyst at Swedbank in Stockholm, has said of AstraZeneca’s move. “Over the past two years, the industry has moved more toward niche opportunities.”
FierceBiotech.com noted that very recently, rival Relypsa’s hyperkalemia drug Veltassa got the nod from the FDA—and also an FDA-mandated black-box warning to caution patients that taking it alongside other oral drugs could dampen their effect.
“And thus ZS-9's fate, and the perceived wisdom of AstraZeneca's buyout, will hinge on labeling,” FierceBiotech wrote. “If ZS' drug is approved without the boxed warning and with more manageable dosing instructions, it will likely emerge as the dominant treatment in hyperkalemia.”