Astellas Pharma’s logo is pictured at its headquarters in Tokyo, Japan, December 3, 2019. REUTERS/Kim Kyung-Hoon
December 3, 2019
TOKYO (Reuters) – Japan’s Astellas Pharma Inc <4503.T> has agreed to buy Audentes Therapeutics Inc <BOLD.O> for about $3 billion in cash as it seeks to make genetic medicines a key area of growth.
Gene therapies are one of the hottest areas of drug research and Astellas, Japan’s second-largest drugmaker by sales, is offering $60 per share for San Francisco-based Audentes, a 110% premium to its closing price on Monday.
Citi analyst Hidemaru Yamaguchi said that while the deal looked expensive, it was a positive move for Astellas as Audentes had “cutting-edge gene therapy modalities”.
“We thought it was only a matter of time before Astellas entered the gene therapy market, given its licensing of development rights for a domestic gene therapy in ALS and other moves,” he wrote in a note for clients.
Gene therapies aim to cure diseases by replacing the missing or mutated version of a gene found in a patient’s cells with healthy copies. With the potential to cure devastating illnesses in a single dose, drugmakers say they justify prices well above $1 million per patient.
Audentes’ investigational drug, AT132, is being developed to treat a rare genetic neuromuscular disorder, which results in extreme muscle weakness, respiratory failure and in some cases early death.
“Audentes has developed a robust pipeline of promising product candidates which are complementary to our existing pipeline, including its lead program AT132,” Astellas Chief Executive Kenji Yasukawa said in a news release.
The all-cash deal is expected to close in the first quarter of 2020 and is subject to regulatory approval including U.S. antitrust clearance.
The companies plan to seek FDA approval for AT312 in mid-2020. The drug has shown promising results in the treatment of X-linked myotubular myopathy (XLMTM) seen mainly in male infants.
Only about 40 boys are born in the U.S. with the condition each year, so that would yield just $80 million in revenue, wrote Jefferies analyst Stephen Barker, assuming a maximum price tag for the treatment.
“The $3 billion acquisition price is therefore more likely to be mainly predicated on the firm’s technology platform and manufacturing capabilities,” Barker wrote.
Shares in Astellas fell 1.3% on Tuesday in Tokyo, underperforming a 0.6% decline in the broader market <.N225>.
Morgan Stanley & Co LLC, is Astellas’ financial adviser while Covington & Burling LLP is the company’s legal counsel.
Centerview Partners LLC is acting as financial adviser to Audentes and Fenwick & West LLP is its legal counsel.
(Reporting by Dania Nadeem in Bengaluru and Rocky Swift in Tokyo; Editing by Anil D’Silva and Edwina Gibbs)
