Sanofi set to buy Bioverativ for more than $11.5 billion

Ivan Schwartz
January 23, 2018

French healthcare group Sanofi has agreed to buy USA hemophilia specialist Bioverativ for $11.6 billion, its biggest deal for seven years, which it said would strengthen its presence in treatments for rare diseases.

The move comes at a time of renewed interest by large drugmakers in smaller biotech firms and predictions by some experts that 2018 will see a substantial pick-up in mergers and acquisitions.

Photo Sanofi's offer would involve paying $105 in cash for each share of Bioverativ, a 64 percent premium on the target company's closing price on Friday.

Bioverativ is a specialist in haemophilia and other rare blood disorders which was spun off from biotech giant Biogen past year.

Piper Jaffray analyst Christopher Raymond called Sanofi SA's takeover of Bioverativ Inc. for $11.6 billion "just what the doctor ordered", and a positive signal for the sector overall.

The Nasdaq biotech index.NBI rose 3.15 percent to notch its best day since June 21 after a flurry of merger activity in the sector with French drugmaker Sanofi (SASY.PA) and US -based Celgene (CELG.O) splurging a combined total of more than $20 billion.

Sanofi lost out on buying California-based cancer specialist Medivation to Pfizer in 2016, and also missed acquiring Swiss biotech company Actelion, which was bought by Johnson & Johnson past year. The deal accounts for increasing competition from a new Roche Holding AG hemophilia drug, Sanofi executives said on Monday. In a longer term gene therapy is promising to disrupt the traditional approach to tackling this inherited blood condition.

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The haemophilia drugs market is "the largest market in rare diseases", worth around $10 billion per year and projected to grow by seven percent annually over the next five years, Brandicourt said in an audio conference with analysts.

Sanofi expects the acquisition to be immediately accretive to its business earnings per share in the 2018 full financial year and up to 5 percent accretive for the following year.

However, some analysts questioned the cost.

Beyond its two marketed products, Bioverativ's pipeline includes a program in Phase 3 testing for cold agglutinin disease, and early-stage research programs and collaborations in haemophilia, and other rare blood disorders, including sickle cell disease and beta thalassemia. The addition of Bioverativ supports this priority by adding to our portfolio a differentiated offering of innovative therapies and providing a platform for growth in rare blood disorders, which will expand our presence in speciality care, further strengthen our leadership position in rare diseases and meet the needs of the patient community.

Sanofi plans to finance the transaction with a combination of cash on hand and through new debt to be raised.

But Sanofi's new CEO Olivier Brandicourt has also been left snubbed in the last couple of buyout talks, missing out on Medivation as well as Switzerland's Actelion after getting beaten out by Pfizer and J&J respectively. The entire transaction is expected to close within three months. The France-based group is also expecting to preserve its already solid credit rating.

If the deal goes through, it could mark the long-awaited start to a burst of M&A deals, with Novo Nordisk making a play for Ablynx as Celgene reportedly hunts a deal to acquire Juno Therapeutics while Biogen and UCB reportedly joined the hunt for a badly damaged Acorda.

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