Commentary

J&J Acquiring Actelion For $30 Billion; R&D Spin-Off

After an off-and-on-again pursuit, Johnson & Johnson this morning landed Swiss biotech company Actelion in a $30 billion all-cash deal unanimously approved by both boards. The two companies will host a Webcast/conference call to discuss the acquisition at 8 a.m. ET today here

The agreement includes Actelion spinning out its drug discovery operations and early-stage clinical development assets into a newly created Swiss biopharmaceutical company called, at least for now, “R&D NewCo.” That will happen, pending shareholder approval, just prior to the close, which is expected to be in the second quarter of 2017.

“With the purchase, J&J, already the world’s biggest maker of healthcare products, is fulfilling its goal of adding a new drug category and dealing a blow to France’s Sanofi, which had also sought to acquire Actelion,” the Irish Times reports.

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Or, as J&J puts it in a statement announcing the agreement, “Actelion has established a leading franchise of differentiated, innovative products for pulmonary arterial hypertension (PAH) that is highly complementary to the existing portfolio of the Janssen Pharmaceutical Companies of Johnson & Johnson.”

“The acquisition gives J&J access to the Swiss group's line-up of high-price, high-margin medicines for rare diseases, helping it diversify its drug portfolio as its biggest product, Remicade for arthritis, faces cheaper competition,” observe Reuters’ John Miller and John Revill.

“The agreement came after negotiations in which Johnson & Johnson walked away from discussions in mid-December, only for the companies to restart exclusive talks about a deal a few days later,” Chad Bray reports for the New York Times.

Actelion will convene an Extraordinary General Meeting (EGM) for shareholders to approve the distribution of shares of R&D NewCo by way of a dividend in kind to Actelion’s shareholders, according to the news release. Jean-Paul Clozel, Actelion’s founder and CEO, will head that company. J&J will hold 16% of it with rights to acquire an additional 16%. Jean-Pierre Garnier, Actelion’s current chairman, will be chairman of R&D NewCo.

“R&D NewCo will work out of Actelion’s drug discovery engine based in Allschwil, Switzerland, specializing in small molecule therapeutics across several areas, including specialty cardiovascular disorders, CNS disorders, immunological disorders and orphan diseases,” reports Ben Adams for FierceBiotech.

“The deal structure fulfills Mr. Clozel’s demand to keep control over early stage drug development, while giving J&J access to Actelion’s lucrative treatments for rare diseases such as pulmonary arterial hypertension,” writes Ralph Atkins for Financial Times

And it fulfills Johnson & Johnson's CEO and chairman Alex Gorsky’s desire to bolster shareholder value (while doing good).

“The addition of Actelion’s specialty in-market medicines and late-stage products is consistent with Johnson & Johnson's efforts to grow in attractive and complementary therapeutic areas and serve patients with serious illnesses and significant unmet medical need,” he says in the statement. “In addition, the transaction structure will provide Johnson & Johnson flexibility to accelerate investment in its industry-leading, innovative pipeline to drive additional growth."

Not all of those early stage trails pan out, of course. 

“The deal with J&J comes just days after Actelion reported that its marketed oral endothelin receptor antagonist, Opsumit (macitentan), failed to meet its primary endpoint in a Phase III study in patients with pulmonary arterial hypertension due to Eisenmenger Syndrome,” according toGEN (Genetic Engineering and Biotechnology News).

J&J will pay $280 per share for Actelion, which is the Swiss franc equivalent of Sfr280.08 per share. 

“Actelion shares closed at Sfr227.40 each in Zurich Wednesday, up 1.97% on the session and pegging the company's market value at Sfr24.5 billion ($24.5 billion). The shares have risen 12.57% since it confirmed exclusive talks with J&J on Dec. 21 but are more than 50% higher since takeover speculation first surfaced in late November,” Martin Baccardax reports for TheStreet.

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