Alexion Shells Out $8.4B for Synageva In Rare Disease Mega-Deal

Alexion Shells Out $8.4B for Synageva In Rare Disease Mega-Deal

Got a wholly owned drug for a rare disease in late-stage testing? In biotech, that often makes you a buyout target. Witness Synageva Biopharma, which is about to be acquired by Alexion Pharmaceuticals for more than twice what it was worth just a day ago.

Alexion, the rare disease drugmaker from Cheshire, CT, has agreed to buy Synageva (NASDAQ: GEVA) in a cash-and-stock deal that values the Lexington, MA-based company at $8.4 billion. Alexion will pay $115 per share in cash, and give Synageva shareholders a 0.6581 Alexion share for each Synageva share they own—a per-share value of $230 apiece. At those numbers, Alexion is paying a roughly 135 percent premium to Synageva’s $95.87 closing price on Monday.

The deal is expected to close in the middle of this year. Alexion is financing the buyout with the help of a $3.5 billion loan. Shareholders owning, in total, about 33.5 percent of Synageva’s shares, have already agreed to support the deal. Alexion needs a majority of shareholders to tender their shares to complete the buyout.

The price tag is an expensive one, but the deal is also a natural fit for Alexion, which has risen to prominence because of an antibody drug, eculizumab (Soliris), that treats ultra-rare blood diseases known as paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome. As with all rare diseases, the patient totals are small, but a yearly drug supply is expensive: eculizumab costs about $500,000 per patient, per year.

Synageva is pursuing the same type of business model, and has a rare disease drug of its own. The drug, which could hit the market this year, is sebelipase alfa (Kanuma), for lysosomal acid lipase deficiency (LAL-D), a rare genetic disease in which fatty material build up in the liver, spleen, and blood vessel walls, often leading to an early death. Kanuma is a recombinant form of the enzyme patients with the disease are lacking. The FDA is expected to decide by Sept. 8 whether to approve Kanuma; it’s also under review in Europe. Synageva has been preparing to launch Kanuma later this year.

“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 Alexion CEO David Hallal, in a statement.

Canaccord Genuity analyst Adam Walsh has estimated around $1.4 billion in peak sales for Kanuma, though exactly how many patients there are with LAL-D worldwide isn’t known as of yet. Synageva has been working to find these patients, and management has said that it expects “hundreds” to be identified by the time it begins selling the drug, Walsh wrote in a recent research note.

Synageva also has two other rare disease prospects in its pipeline: SBC-103, an enzyme-replacement therapy for a rare metabolic disease called mucopolysaccharidosis IIIB that is in early-stage testing; and SBC-105, a preclinical candidate for calcification disorders.

The buyout is one of this year’s largest in biotech, though it still pales in comparison to the $21 billion AbbVie paid for Pharmacyclics (NASDAQ: PCYC) in March. It’s also the latest deal centered around a rare disease therapy. Shire paid $5.2 billion for NPS Pharmaceuticals in one such deal in January (and followed up with a $245 million buyout of Meritage Pharma), and Stockholm-based Swedish Oprhan Biovitrum (known as Sobi) has received a buyout offer from an unnamed bidder.

Alexion is holding a conference call this morning to discuss the deal.

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