On May 6, 2015 Alexion Pharmaceuticals, Inc. (Nasdaq:ALXN) and Synageva BioPharma Corp. (Nasdaq:GEVA) reported that they have entered into a definitive agreement pursuant to which Alexion will acquire Synageva for consideration of $115 in cash and 0.6581 Alexion shares, for each share of Synageva, implying a total per share value of $230 based on the nine day volume-weighted average closing price of Alexion stock through May 5, 2015 (Press release, Alexion, MAY 6, 2015, View Source [SID:1234503620]). The acquisition strengthens Alexion’s global leadership in developing and commercializing transformative therapies for patients with devastating and rare diseases.
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The transaction has been unanimously approved by both companies’ Boards of Directors, and is valued at approximately $8.4 billion net of Synageva’s cash. The transaction is expected to accelerate and diversify Alexion’s growing revenues, and Alexion expects to achieve annual cost synergies starting this year and growing to at least $150 million in 2017. In addition, the transaction is expected to be accretive to non-GAAP earnings per share in 2018.
"Synageva is an ideal strategic and operational fit for Alexion that aligns with what we know well and do well — providing life-transforming therapies to an increasing number of patients with devastating and rare diseases," said David Hallal, Chief Executive Officer of Alexion. "With strong ongoing Soliris growth in PNH and aHUS worldwide, and the anticipated 2015 global launches of Strensiq and Kanuma, we will accelerate and diversify our revenue growth. We are excited to create the most robust rare disease pipeline in biotech across a range of therapeutic modalities. Synageva is an outstanding company that shares Alexion’s commitment to serving patients with rare diseases, and together we will create increasing value for our stakeholders."
"Alexion is uniquely suited to advance Synageva’s mission to deliver life-saving therapies to patients whose diseases were once considered too rare for developing treatments," said Sanj K. Patel, President and Chief Executive Officer of Synageva. "As Kanuma moves closer toward patients who suffer from LAL Deficiency, and the other pipeline programs continue to progress, I am confident that this transaction will help continue to improve the lives of patients with LAL Deficiency and other devastating, rare diseases for years to come."
The addition of Kanuma expands Alexion’s premier global metabolic rare disease franchise. Alexion will leverage its proven expertise in rare disease education and diagnostics, and its 50-country operating platform, to maximize the opportunity to serve patients suffering from LAL-D. The Company expects that these efforts will result in more infants, children and adults with LAL-D receiving a rapid and accurate diagnosis and, following regulatory approvals for Kanuma, enable physicians to make better informed treatment decisions for their patients. Kanuma is under Priority Review with the U.S. Food and Drug Administration (FDA) and has been granted accelerated assessment of its Marketing Authorization Application (MAA) by the European Medicines Agency (EMA). Kanuma has been granted Breakthrough Therapy Designation by the FDA for LAL Deficiency presenting in infants. Regulatory decisions in the U.S. and Europe are expected in the second half of 2015.
Alexion developed Soliris (eculizumab) from the laboratory through regulatory approvals, and currently provides Soliris to patients around the world with paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS), two life-threatening ultra-rare disorders. Since its launch in 2007, Soliris has grown to more than $2 billion in revenues in 2014, with additional growth anticipated as the Company has consistently identified significant numbers of new patients with PNH and aHUS each year. With Soliris, and following the anticipated approvals of Kanuma and Strensiq, Alexion will have three highly innovative and transformative therapies serving patients with four devastating and rare diseases in 2015.
"By every measure, Alexion is at the strongest and most promising point in our history given the strength of our clinical, commercial, and operational performance and the depth of our team," said Leonard Bell, M.D., Chairman of Alexion’s Board of Directors. "These strengths will enable us to accelerate the transformation of the lives of patients suffering from LAL-D around the world. Also, I am personally very pleased that Dr. Felix Baker, a deeply experienced board member and leader in the biopharmaceutical industry, will join the Alexion Board of Directors when our transaction is completed. I look forward to working with Felix as we pursue our ambitions to serve more patients with more severe and rare disorders."
"This transaction provides Synageva shareholders with immediate value and the opportunity to participate in Alexion’s long-term growth potential," said Felix Baker, Ph.D., Chairman of Synageva’s Board of Directors. "I am excited to be joining the board of Alexion, a leading, global biotechnology company that is aligned with the mission that Synageva was founded upon – to serve patients who would otherwise be left behind."
Acquisition Creates Most Robust Rare Disease Pipeline in Biotech; Expands Manufacturing Capabilities
Synageva’s pipeline is complementary to Alexion’s growing portfolio of highly innovative product candidates for patients with devastating and rare diseases. Alexion will have a robust clinical pipeline with eight product candidates in clinical trials for eleven indications. The programs include Synageva’s SBC-103, an investigational enzyme replacement therapy in an ongoing Phase 1/2 trial for patients with mucopolysaccharidosis IIIB (MPS IIIB), a genetic and progressive rare metabolic disease. SBC-103 was granted Fast Track designation by the FDA in January 2015.
In addition, Alexion will have more than 30 diverse pre-clinical programs across a range of therapeutic modalities, including 12 from Synageva’s novel drug discovery platform. At least four pre-clinical candidates from the combined pipelines are expected to enter the clinic by year-end 2016.
Alexion will also have expanded manufacturing capabilities with three Synageva upstream facilities. Synageva brings to Alexion a proprietary manufacturing technology, known as the expression platform, an integrated system of proprietary vectors that can be used to produce proteins with human-like glycosylation patterns, creating additional therapies with better targeting capabilities and the potential for greater efficacy.
Terms of the Transaction
Alexion will acquire all of the outstanding shares of common stock of Synageva through an exchange offer, followed by a second-step merger, with each share receiving $115 in cash and 0.6581 shares of Alexion stock. The stock portion of the consideration is expected to be tax-free to Synageva stockholders.
The completion of the exchange offer and the merger are subject to customary closing conditions, the tender of a majority of the outstanding shares of Synageva common stock and receipt of required regulatory approval. The transaction is expected to close mid-2015. The merger agreement provides that Alexion may, in certain circumstances, determine to alternatively effect the transaction through a one-step merger, in which case a meeting of Synageva stockholders would be held to vote on the transaction.
In connection with the Transaction, Synageva shareholders, including affiliates of Baker Brothers Investments, have entered into voting and support agreements with Alexion covering approximately 33.5% of Synageva’s outstanding shares.
Alexion has received committed financing of $3.5 billion from Bank of America Merrill Lynch and J.P. Morgan in connection with the transaction.
Lazard and J.P. Morgan are acting as the financial advisors to Alexion, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel. Goldman Sachs & Co. is acting as the financial advisor to Synageva, and Sullivan & Cromwell LLP and Ropes & Gray LLP are serving as legal counsel.
For additional details on the transaction, please visit www.alexion-synagevatransaction.com.
Share Repurchase Authorization
The Company also announced that its Board of Directors has increased the size of the Company’s share repurchase authorization to a total of $1 billion. The Board’s authorization is open-ended and does not establish a timeframe for the purchases; however, no repurchases will be made during the pendency of the transaction.