Swiss drugmaker Novartis plans to acquiring a majority stake in its research partner, Swiss biotech company Speedel for about $880 million to speed up development of potential blockbuster blood-pressure drug Tekturna, it said on Thursday. The drug, known as Rasilez in Europe, is the first Speedel drug to reach the market and was co-developed with Novartis.
Novartis has a long standing long-relationship with Speedel, starting by providing financial support that led to its creation in 1998 and development of Tekturnand rights to early-stage development of Tekturna/Rasilez (aliskiren), which were reacquirred in 2002. Novartis conducted Phase III trials that led to US and European approvals in 2007 as the first new type of high blood pressure medicine - known as direct renin inhibitors - in more than a decade.
The swiss giant already holds a stake in Speedel and offered to buy the remaining at 130 francs a share, a whopping 94 per cent premium on Monday's closing price. Expectedly, Speedel shares surged on this announcement and now stand close to the offer price. Before this, the stock had lost 40 per cent of its value in the last six months.
Big European drugmakers have been buying out smaller biotechnology firms in order to secure their profitability, improve their pipelines of drugs under development or testing and fight back competition from generic drugmakers when their patents expire. On average, similar deals had happened on 63 per cent premiums to prevailing market prices.
Indianapolis-bases Eli Lilly, which sells antidepressant Prozac, said Wednesday that it would spend $64.0 million to acquire SGX Pharmaceuticals and expand its biotechnology footprint. Last week British drugmaker Shire secured the acquisition of competitor Jerini, a specialist in treating rare diseases.( See: American drugmaker Eli Lilly buys biotech company SGX Pharma for $64 million)
In a first step, Novartis raised its stake in Speedel by 51.7 per cent to 61.4 per cent through a series of off-exchange transactions from major shareholders, including 21.5 per cent from Speedel CEO Alice Huxley, for 130 Swiss francs per share in cash.
Novartis said it would offer the same price in cash to shareholders for the remaining stake and it expected the full acquisition to cost about 907 million Swiss francs ($882.3 million).
Speedel's board is evaluating the bid and will make a decision within the next 10 days, Speedel said in a statement.
''In light of the currently very challenging environment for Speedel - the upcoming financing needs and the depressed market sentiment, I have agreed to a solution which promises a solid fundament for the future of Speedel, and further investments in the company's successful research and clinical development programmes,'' Speedel CEO Huxley said in the statement.
Integrating Speedel into Novartis would enable Switzerland's second-biggest drugmaker to ''accelerate development of Tekturna/Rasilez, particularly in combination with other medicines, and further advance Speedel's pipeline of novel compounds,'' Joseph Jimenez, head of Novartis' drug unit said.
Speedel's pipeline targets hypertension and builds on the promise of direct renin inhibitors seen with Tekturna/Rasilez. Follow-on direct renin inhibitor projects include SPP635 (Phase II) as well as SPP1148 and SPP676 (Phase I). Other projects include SPP2745, a preclinical compound in the aldosterone synthase inhibitor class being investigated for potential benefits in treating patients with various cardiovascular diseases.
Renin is the key enzyme at the top of the Renin Angiotensin System (RAS), an important regulator of blood pressure. Direct renin inhibition is believed to provide additional benefits - including end-organ protection - beyond current therapies for patients suffering from cardiovascular diseases such as high blood pressure, chronic renal failure and congestive heart failure. High blood pressure and its effects are the world's No. 1 killer and affects about one billion people worldwide, according to the American Heart Association.
Known as Tekturna in the US and Rasilez in the rest of the world, this medicine will continue to benefit from the unrivaled position of Novartis in cardiovascular disease thanks to a portfolio that includes Diovan (valsartan) - the world's top-selling branded high blood pressure medicine - and one of the industry's most highly rated sales forces.
Various single-tablet therapies are being developed that combine Tekturna/Rasilez with other high blood pressure medicines. A combination with a diuretic was approved in the US, with a European submission awaiting approval. Another combination in development involves Diovan, the leader in the angiotensin receptor blocker (ARB) class.
On 8 July Novartis acquired a 25-per cent stake in Alcon Incas part of a definitive agreement with Nestlé S.A. reached in April 2008 that provides the right to acquire majority ownership of the world leader in eye care in two steps. (See: Novartis to acquire Nestle stake in eye care major Alcon for $11 billion).