Pharma firm Alexion to buy peer Synageva

Paris

ALEXION Pharmaceuticals Inc on Wednesday said it agreed to buy Synageva BioPharma Corp for US$8.4 billion, more than twice its market value, to expand its offering of potentially high-priced medicines for rare diseases.

Alexion's willingness to pay an eye-popping premium for Synageva demonstrates that the appetite for large acquisitions in healthcare continues unabated. It also highlights the attraction of medicines for rare diseases that can command exceptionally high prices with little payer pushback because of the limited number of patients.

Alexion's lone product, Soliris, a treatment for two extremely rare life-threatening conditions, is among the world's most expensive drugs. The medicine, which can cost more than US$500,000 per year, generated sales of US$2.23 billion in 2014.

The companies' combined developmental pipelines would give Alexion eight experimental medicines in clinical trials for 11 diseases, the company said. That includes Synageva's Kanuma, which is awaiting US and European approval to treat a rare and potentially fatal condition that causes a build-up of fat in the blood and liver. Alexion chief executive David Hallal expressed confidence that Kanuma sales will eventually exceed US$1 billion.

The deal would also give Alexion Synageva's SBC-103, an experimental enzyme replacement therapy for a rare genetic disorder that has both orphan status and fast-track designation from the US Food and Drug Administration. That should speed up the approval process and, in the event of approval, confer an additional seven years of marketing exclusivity, an incentive for developing medicines for small patient populations.

"I think Alexion wanted to do something big. There aren't many opportunities . . . to do that, and so this is their big shot," said Paul Yook, portfolio manager at BioShares Biotechnology Funds, which holds stakes in both companies.

Mr Yook said that the announcement could put Alexion in the takeover crosshairs. "Anybody who's been looking at them now will have to make a move more quickly if they don't want to acquire Synageva as well."

Alexion is offering US$115 in cash and 0.6581 of its shares, or US$225.92 per Synageva share, more than double its closing price of US$95.87 on Tuesday. "While some investors may be picking their jaws off the floor at such a valuation, we note that Synageva has only disclosed a fraction of its development efforts," Baird Equity Research analyst Christopher Raymond said.

Synageva's shares soared on Wednesday, ending regular trading at US$203.39, up 112 per cent. Alexion shares traded as low as US$150.06 before finishing at US$155.01, down 8 per cent, a sign of investor dissatisfaction with the price the company agreed to pay for Synageva. REUTERS