Novartis to acquire The Medicines Company for $9.7 billion

Novartis confirmed Sunday that it has agreed to buy The Medicines Company for $85 per share in cash, or roughly $9.7 billion on a fully diluted equity basis, gaining the RNAi-based PCSK9 inhibitor inclisiran. Rumours initially surfaced last week that Novartis was looking to acquire the company in what was viewed as a potential move to bulk up its portfolio of heart treatments. The offer price represents a premium of approximately 24% over The Medicines Company's closing price on November 22. The transaction, which is expected to become final in the first quarter of 2020, was unanimously approved by the boards of both companies.

Novartis CEO Vas Narasimhan called inclisiran "a potentially transformational medicine that reimagines the treatment of atherosclerotic cardiovascular disease (ASCVD) and familial hypercholesterolaemia (FH)." He also said inclisiran "adds an investigational therapy with the potential to be a significant driver of Novartis' growth in the medium to long term." The drugmaker estimates that over 50 million secondary prevention patients worldwide with ASCVD or FH on existing standard of care do not achieve their LDL cholesterol goals and remain at higher risk of cardiovascular events. 

Assuming the transaction is completed early next year, Novartis forecasts that inclisiran will begin contributing to overall company and innovative medicine division sales starting in 2021. It added the drug is also expected to drive growth of the cardiovascular-renal-metabolism franchise, with "potential to become one of the largest products by sales in [our] portfolio."

The Medicines Company recently announced data from the ORION-9, ORION-10 and ORION-11 trials of inclisiran involving over 3600 high-risk patients with ASCVD and FH. Novartis said that in all three studies, the therapy demonstrated "potent and durable" reductions in LDL-cholesterol, as well as an "excellent" safety and tolerability profile. Moreover, the drug's twice-yearly dosing schedule "will likely contribute to improved patient adherence," the drugmaker noted. 

Meanwhile, the ongoing ORION-4 trial is evaluating the cardiovascular morbidity and mortality benefits of inclisiran. The Medicines Company has said it expects to file regulatory submissions for the drug in the US by the end of the year and in Europe in the first quarter of 2020. 

Compared with a no deal scenario, Novartis said the acquisition will "modestly dilute core [earnings]...during the next few years" as it invests to launch inclisiran. It added that the merger is expected to be "significantly accretive" to core operating income and earnings in the medium term, driven by sales growth and operational synergies. The company also plans to continue to expand core margins of the innovative medicines division to reach mid-thirties in the near term, and mid- to high-thirties in the medium term, while investing in launches, including inclisiran. However, the guidance assumes "no Gilenya (fingolimod) generics will enter the US market in 2020," it noted.

The Swiss drugmaker's cardiovascular portfolio includes the heart failure drug Entresto (sacubitril/valsartan), which had sales of $430 million in the third quarter, as well as the investigational antisense therapy TQJ230 that it licensed earlier this year from Akcea Therapeutics for $150 million.

Meanwhile, Novartis recently gained an option to acquire IFM Therapeutics' subsidiary IFM Due for up to $840 million as part of an agreement to develop immunotherapies that inhibit the cGAS/STING pathway to treat inflammatory and autoimmune diseases. Narasimhan has cited that deal as an example of "a much more focused" acquisition strategy.

For related analysis, see ViewPoints: Inclisiran's risk/benefit may be getting too solid to ignore.  

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