Terms of the deal call for Cheshire, Conn.-based Alexion to pay $610 million in cash up front and up to $470 million in potential regulatory and sales milestone payments for VC-backed Enobia, which counts OrbiMed Advisors LLC and Desjardins Venture Capital among its investors. Alexion isn't issuing any equity as part of the deal and will finance the transaction with cash on hand and $300 million in bank debt. The transaction is expected to close during the first quarter of 2012.
With the purchase of Montreal-based Enobia, Alexion will acquire worldwide development and commercial rights to Astofase Alfa, a potential treatment for patients suffering from hypophosphatasia, or HPP, a rare life-threatening metabolic bone disease that can cause skeletal deformity and progressive damage to multiple vital organs. There are no FDA-approved treatments for the disease.
Astofase Alfa was awarded orphan drug status in the U.S. and European Union in 2008 and fast-track status in 2009. It is now in Phase 2 clinical trials.
Adding Astofase Alfa gives Alexion, headed by CEO Leonard Bell, two products that treat ultra-rare diseases. The buyer's lead product is Soliris, a drug that treats paroxysmal nocturnal hemoglobinuria, or PNH, a disease in which red blood cells break down earlier than normal; and atypical hemolytic uremic syndrome, or aHUS, a rare genetic disease that progressively damages vital organs, causing kidney failure, strokes, and heart attacks. Alexion launched Soliris in 2007 and has since been expanding the drug's global reach. Alexion posted $97.03 million in net income on $540.96 million in Soliris sales in 2010 and followed that up with $127.42 million in net income on $555.87 million in the drug's sales over the first nine months of 2011.
The deal marks the second acquisition Alexion has made in 2011 to boost its pipeline at the clinical or pre-clinical level. Alexion paid $111 million up front and as much as $367 million in total including milestone payments for development-stage biotech Taligen Therapeutics Inc. on Jan. 31, giving it access to multiple pre-clinical compounds. Among them is a potential treatment for age-related macular degeneration, or AMD, a condition that results in a loss of vision in the center of the visual field due to damage to the retina.
Alexion's stock dipped from a $70.92 per share close on Wednesday to $69.95 per share in early trading on Thursday. The company has a market cap of $12.95 billion. Its most significant shareholders as of an April proxy statement were FMR LLC (14.80%), T. Rowe Price Associates Inc. (6.70%), BlackRock Inc. (6.03%) and Capital Research Global Investors (5.10%).
Enobia's largest investors include OrbiMed, Desjardins, The Solidarity Fund QFL, CTI Life Sciences Fund LP and Kirchner Investment Management Corp. Enobia has benefitted from at least $105.7 million in three stages of VC financing since 2005. The investor group led a $15.6 million Series A round in 2005 and followed it up with a $40.1 million Series B financing in 2007 and a $50 million Series C financing two years later.
Ropes & Gray LLP is Alexion's legal counsel, while Goldman Sachs & Co. is the buyer's financial adviser. WilmerHale provided Enobia with legal advice. Bank of America Merrill Lynch is the target's financial adviser.
Time Warner Cable Inc., the subject of numerous takeover rumors, will replace its head of mergers and acquisitions with Christian Lee. For other updates launch today's Movers & shakers slideshow.
Private equity firms are ready to close out a slow year. So, where are the highlights? More video