Health Care Deal News: Spotlight on Biotechnology-January 2012

In the single largest health care deal for all of December 2011, Alexion Pharmaceuticals (NASDAQ: ALXN) is acquiring Enobia Pharma Corp. for as much as $1.08 billion. Based in Cheshire, Connecticut, Alexion develops and delivers life-changing drug therapies for patients with serious and life-threatening medical conditions. Based in Montreal, Quebec, with offices in Cambridge, Massachusetts, Enobia is a clinical-stage biotech that is focused on developing new therapeutics for serious metabolic bone disorders. Under terms of the deal, ALXN will pay $610.0 million upfront and up to $470.0 million in regulatory and sales milestones. This acquisition gives ALXN access to the first potential treatment for patients with hypophosphatasia; Enobia’s candidate is currently in phase 2 trials. The deal is to be paid from cash on hand and $300.0 million of committed bank debt. Goldman Sachs and BofA Merrill Lynch provided ALXN and Enobia, respectively, with financial advice on this deal.

In the second-largest biotech deal of the month, another cross-border transaction, France’s Les Laboratoires Servier has obtained an option for a license from MacroGenics, a Maryland-based company, to develop and commercialize MGA271. This drug candidate is an Fc-optimized monoclonal antibody that targets B7-H3 and is being studied in a phase 1 trial for the treatment of solid tumors. This transaction accordingly enlarges Servier’s oncology development pipeline. Under terms of the deal, Servier will make an upfront payment of $20.0 million and pay $60.0 million in an option exercise fee and near-term milestone payments. It may also make up to $390.0 million in long-term milestone payments. Tiered, double-digit royalties on net sales are also contemplated in the agreement. MacroGenics retains rights to MGA271 in North America, Japan, Korea and India while Servier has an option to obtain an exclusive license covering the rest of the world. Prior to the exercise of Servier’s option, both companies will fund specified R&D activities.

Momenta Pharmaceuticals (NASDAQ: MNTA) is acquiring the Sialic Switch assets of Virdante Pharmaceuticals for up to $56.0 million. The assets in question include intellectual property and cell lines relating to the sialylation of intravenous immunoglobulin and other proteins. Under terms of the deal, MNTA will make $4.5 million in an upfront payment and up to $51.5 million in development and regulatory milestones. This acquisition gives MNTA access to and control over Virdante’s Sialic Switch technology, which holds the potential to regulate the anti-inflammatory activity of proteins. This may serve, it is believed, as a component in treatments for autoimmune and inflammatory diseases.

In January, J.P. Morgan is presenting its 30th health care conference in California. It provides deal makers with an opportunity to evaluate potential partners. The buzz is that Amgen (NASDAQ: AMGN) and Celgene (NASDAQ: CELG) may be scouting out deals to boost their prospects. While the Nasdaq Biotechnology Index has advanced 36% in the past five years, AMGN, the world’s largest biotech, fell 6% while CELG rose only 18%. Both companies are thus motivated to accelerate their growth so they don’t lag behind their peers. Well-chosen deals could help both achieve this goal...Want to read more? Click here for a free trial to The Health Care M&A Monthly and download the current issue today