Sanofi said on Monday it would pay 45 euros per share in cash for Ablynx, a premium of 21 percent over its closing price on Friday, and more than double the price before Novo went public with its initial bid. Novo Nordisk conceded defeat, saying it could not justify the knock-out price being paid by Sanofi for Ablynx, which is developing a prized experimental drug for a rare blood disorder.
This month has seen a spike in multibillion-dollar deals in biotech, with US-based Celgene paying $9 billion for cancer specialist Juno Therapeutics, and several experts predicting a bumper year for M&A. Total biotech M&A so far this month now stands at $26.3 billion, or more than 80 percent of the value of all deals in 2016 and far ahead of any comparable January tally in over a decade, according to Thomson Reuters data.
Such deals are being driven by the need for large drugmakers to tap the promising new medicines being developed by smaller rivals to help revive flagging growth. Last week, Sanofi agreed to buy US haemophilia specialist Bioverativ for $11.6 billion, its biggest deal for seven years and a major play to strengthen its presence in treatments for rare diseases. Sanofi Chief Executive Officer Olivier Brandicourt said the deals expanded the French company's late-stage pipeline and strengthened its line-up of treatments for rare blood disorders - but did not necessarily mark the end of its M&A ambitions.
"We have a strong balance sheet. We generate significant cash flow. We are going to look at opportunities on a case-by-case basis," he told reporters. "We also identified CHC (consumer healthcare) previously as an area where we want to sustain a leadership position and therefore you can expect us to evaluate opportunities."
Both Pfizer and Merck KGaA are currently looking to divest consumer health businesses. Sanofi, which expects the cost of debt to finance the deal to be around 1 percent, said Ablynx would boost long-term shareholder value, while being neutral for business earnings per share in 2018 and 2019. The Belgian group specialises in the research of novel drugs based on so-called nanobodies found in the immune systems of llamas and alpacas, for which it partners with several of the world's largest pharmaceutical companies.
Sanofi is already one of Ablynx's big pharma partners, after striking a deal in July 2017 to find new treatments for inflammatory diseases. By buying the company outright it will now get access to Ablynx's most promising asset, the experimental drug caplacizumab for treating the blood disease acquired thrombotic thrombocytopenic purpura. Brandicourt said caplacizumab would complement Sanofi's line-up of blood products, following the acquisition of Bioverativ and an earlier deal to obtain global rights for fitusiran from Alnylam.
Sanofi will be able to use its existing infrastructure and the recently acquired platform from Bioverativ to help to commercialise caplacizumab. It will also benefit from some of the other drugs Ablynx is working on, such as an infant anti-viral treatment, that would not have fitted within Novo Nordisk.
Berenberg analysts said Ablynx was a good fit but they estimated the deal would generate no more than a 4 percent return on invested capital, assuming caplacizumab sales of around 400 million euros by 2023. Ablynx itself has forecast peak caplacizumab sales of 1.2 billion euros, but Sanofi said it was too early to comment.