Novartis to acquire The Medicines Company
Promising cholesterol drug to join Novartis pipeline with $9.7-billion acquisition
PARSIPPANY, N.J.—On Nov. 24, The Medicines Company announced an $85-per-share, all-cash transaction agreement under which Novartis AG will acquire The Medicines Company—a deal that totals about $9.7 billion (on a fully diluted basis that includes outstanding stock options and convertible debt) and will add the drug inclisiran to Novartis’ pipeline. Inclisiran is an investigational, twice-annual therapy to lower low-density lipoprotein (LDL) cholesterol, which has the “potential to transform treatment of cardiovascular disease,” according to the companies.
Inclisiran is a small interfering RNA (siRNA) therapy being studied to evaluate its ability to lower LDL cholesterol—also known as LDL-C or bad cholesterol. It is designed to prevent the production of proprotein convertase subtilisin/kexin type 9 (PCSK9) at its primary source in the liver.
Wrote George Budwell at The Motley Fool: “The big deal is that this transaction adds yet another potential mega-blockbuster product to Novartis’ rapidly growing lineup of cutting-edge products. Specifically, the Swiss pharma titan will gain the rights to the [siRNA therapy inclisiran] originally developed by Alnylam Pharmaceuticals and later licensed out to The Medicines Company. The Medicines Company shepherded the drug through a successful late-stage program, setting the stage for a regulatory filing in the U.S. before year’s end and another regulatory submission in the EU in early 2020.”
The price tag at the time of the announcement represented a 45-percent premium to the unaffected share price of The Medicines Company and a 57-percent premium to its unaffected one-week average price. The transaction has been approved by the boards of directors of both companies and is expected to be completed in first quarter of 2020.
“Our company’s singular, relentless focus and the unwavering commitment of our employees have led to this opportunity to unlock the intrinsic value of inclisiran for patients and to maximize value for our shareholders,” said Mark Timney, CEO of The Medicines Company. “We are excited that millions of patients with atherosclerotic cardiovascular disease and familial hypercholesterolemia will potentially benefit from this transformational therapy.”
Added Dr. Alexander J. Denner, chairman of The Medicines Company board: “This $9.7-billion transaction is a great outcome for shareholders of The Medicines Company. Not so long ago, The Medicines Company was at a crossroads due to the loss of its key revenue driver. I am proud of the company’s transformation under a reconstituted board into a lean, highly focused team successfully advancing an exciting new therapy and creating tremendous value for patients and shareholders.”
“If approved, inclisiran would compete directly against Amgen’s Repatha and Regeneron and Sanofi’s Praluent. Inclisiran’s competitive edge, in theory, stems from its ability to be dosed far less frequently than these first-generation therapies,” according to Budwell.
Zacks Investment Research echoed this thought, noting, “While Praluent and Repatha are approved with once every two weeks or once-a-month dosing, inclisiran has been developed for twice-a-year dosing. This is likely to give inclisiran an upper hand following its commercial launch.”
“The company divested all its marketed products in 2018 to focus on the development of PCSK9 inhibitor, inclisiran. This initiative has primarily driven its share price so far this year, on the back of impressive progress of inclisiran. This acquisition offer also suggests a good return to the company’s shareholders,” Zacks Investment Research analysts also wrote in a note about the deal. “Moreover, the acquisition of inclisiran by Novartis will boost the candidate’s prospects, following its potential approval, as the company has a strong position in the market and cash resources to support the launch and counter competition compared to The Medicines Company.”