October closed out with almost $1 billion in biotech IPOs, $3 billion in merger-and-acquisition activity, and potentially $3 billion in partnering deals. And an FDA approval sent at least one stock on a wild ride.
This article published with permission from The Burrill Report.
France’s Sanofi-Aventis S.A. reinforced its presence in China with the acquisition of BMP Sunstone Corp. (NASDAQ: BJGP) for $521 million in cash, representing a 30% premium above the closing price of Sunstone’s shares before its board of directors unanimously approved the transaction.
The merger follows the recent formation of Hangzhou Sanofi Minsheng Consumer Healthcare joint venture and will make the pharmaceutical powerhouse a leading consumer healthcare company in China.
“The acquisition of BMP Sunstone will not only leverage our consumer healthcare business in China, but will also bring us unique access to new expanding distribution channels which are expected to account for a third of the pharmaceutical market in China in the coming years,” says Sanofi CEO Chris Viehbacher.
BMP Sunstone of Plymouth Meeting, Pa., is a specialty pharmaceutical that manufactures pediatric and women’s health products sold in pharmacies throughout China. The company had sales of approximately $147 million in 2009, 60% of which were in the consumer health segment. The company also markets a portfolio of products under exclusive multi-year licenses in China, primarily focused on women's health and pediatrics, and provides pharmaceutical distribution services through subsidiaries in Beijing and Shanghai.
Sanofi has been moving aggressively into the consumer healthcare market as a way to diversify and grow the company as several of its biggest drugs go off patent. The company claims to be the fifth largest consumer healthcare company in the world, since its acquisition of U.S. consumer products company Chattem in 2009. China’s market for these products is second only to the U.S. and has grown at 11% per year since 2005, a trend that is expected to continue as its middle class grows and becomes more urban.
Sanofi already has a major presence in China with 5,000 people in more than 200 cities, three manufacturing facilities, and a large research-and-development center in Shanghai. Completion of the transaction is subject to Chinese regulatory approval and the approval of BMP Sunstone stockholders, 23% of which have committed to vote in favor of the merger.
Shares of BMP were trading at $9.82 early Monday.
Sanofi was not the only pharmaceutical company crossing borders to do a deal. Israeli generic powerhouse Teva Pharmaceuticals Industries Ltd. (NASDAQ: TEVA) went to Germany to acquire Théramex, Merck KGaA’s women’s health business, for $367 million. Théramex’s products are sold in 50 countries, including some in which Teva will acquire distribution rights. Théramex has built an especially solid reputation in France and Italy as a company dedicated to women’s health and gynecology.
In addition to Teva’s upfront cash payment, Merck will be eligible to receive certain performance-based milestone payments. The transaction is expected to close towards the end of this year or in early 2011. American depositary shares of Teva were trading at $51.25.
Jordanian pharmaceutical Hikma Pharmaceuticals PLC is expanding its global injectables portfolio and its U.S. market presence through the acquisition of Baxter International Inc.’s (NYSE: BAX) multi-source injectables business for $112 million in cash. The deal will position Hikma as the second-largest injectables supplier in the U.S. Shares of Baxter, based in Deerfield, Ill., were trading at $50.96.
Biotech companies also reaped the rewards of a busy week of dealmaking. Venture-backed MacroGenics Inc. enriched its coffers with two drug-discovery deals with big pharmaceutical companies — Germany’s Boehringer Ingelheim GmbH and Pfizer Inc. (NYSE: PFE) of New York will use MacroGenics’ antibody platform directed at multiple targets. Rockville, Md.-based MacroGenics expects to receive at least $60 million from Boehringer and could get up to $210 million more for the successful development of each of up to 10 therapeutics developed by the collaboration.
The collaboration with Pfizer is focused on cancer. Financial terms were not disclosed. (Read related story here.) Shares of Pfizer were trading at $17.68.
Seattle’s Immune Design Corp. granted MedImmune LLC of Gaithersburg, Md., exclusive worldwide rights to use its novel early-stage adjuvant in vaccines for select infectious diseases. In return, Immune Design will get an upfront licensing fee and potential development, regulatory and commercial milestones of up to $212 million, in addition to royalty payments on sales of marketed products.
Amicus Therapeutics Inc. (NASDAQ: FOLD) licensed Amigal, its late-stage Fabry Disease drug, to GlaxoSmithKline PLC of the U.K. for $30 million upfront and up to $170 million in milestone payments, as well as significant royalties on global sales. GlaxoSmithKline is also taking a 20% stake in the Cranbury, N.J., biotech for another $31 million. As part of their agreement, the companies also intend to advance clinical studies exploring the co-administration of Amigal with enzyme replacement therapy to treat Fabry Disease. Shares of Amicus were trading at $4.10; American depositary shares of GlaxoSmithKline were at $39.37.
Finally, Pacific Biosciences of California Inc. (NASDAQ: PACB) went public, pricing 12.5 million shares at $16 each to raise $200 million. The Menlo Park, Calif., company is developing DNA sequencing machines that promise to sequence the genome faster, cheaper, and more accurately. (See story here.) Its shares were at $16.20.
In other market moving news:
The biotechnology sector posted strong gains last week, led by Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) and Celgene Corp. (NASDAQ: CELG). Shares of Amylin rebounded 15% after dropping almost 50% when the U.S. Food and Drug Administration requested more data about potential heart risks of its drug Bydureon. The jump followed after an analyst suggested investors had oversold the stock last week. Amylin shares were trading at $12.80.
Celgene rose almost 6% after it reported its third-quarter net income rose 30% on higher sales of cancer drugs, prompting a boost in full-year guidance. Sales of Celgene’s cancer drug Revlimid rose 43% to $641 million, while sales of the cancer drug Vidaza increased 37% to $141 million. Its shares were trading at $61.52.
Elsewhere, Avanir Pharmaceuticals Inc. (NASDAQ: AVNR) shares went for a wild ride Friday -- plummeting more than 50% to $1.31 before rebounding to close at $2.42 on 12 times average trading volume Monday. Its shares then more than doubled Monday on news the FDA approved its Nuedexta drug as the first treatment for pseudobulbar affect, a disorder of emotional expression and regulation characterized by uncontrollable episodes of laughing and crying that often cause embarrassment, curtailment of social activities, and reduction in quality of life. Avanir shares were at $5.02.
The FDA also approved Forest Laboratories Inc.’s (NYSE: FRX) antibiotic Teflaro drug for use in patients with pneumonia and bacterial skin infections. The New York drug developer’s shares were at $33.39.
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