Novartis has entered into an agreement and plan of merger with The Medicines Company to acquire the US-based biopharmaceutical company for $85 per share in cash, valuing the company at approximately $9.7 billion on a fully diluted equity basis. The offer price represents a premium of approximately 41% over The Medicines Company’s 30-day (to 22 November 2019) volume weighted average price of $60.33 and approximately 24% premium over The Medicines Company’s closing share price of $68.55 on 22 November 2019, which represented a fully diluted equity value of approximately $7.7 billion when including the impact of outstanding stock options and convertible debt. The transaction has been unanimously approved by the Boards of Directors of both companies.
A press release reports that the planned acquisition of The Medicines Company would allow Novartis to continue building pipeline depth in a key therapeutic area—a central pillar of its mergers & acquisition strategy—and is aligned with the Novartis strategic priority of delivering transformational medicines for patients. The purchase of The Medicines Company would add a potentially first-in-class siRNA inhibitor targeting PCSK9 with the potential to fundamentally change the treatment of elevated LDL-C in high risk patients.
Furthermore, with The Medicines Company expecting to file regulatory submissions in the USA in the fourth quarter of 2019 and in Europe in the first quarter of 2020, inclisiran represents a near-term product launch opportunity and is expected to contribute to Group sales from 2021. According to the press release, broadening the cardiovascular portfolio would enable Novartis to leverage its core commercial capabilities including its strong cardiovascular field force both in the USA and globally. Finally, the transaction is consistent with Novartis’ capital allocation priorities to invest in transformative innovation and long term value creation for shareholders.
Assuming completion in the first quarter of 2020, Novartis expects inclisiran to start to contribute to Group and IM Division sales from 2021. It is also expected to further drive growth of the Cardiovascular-Renal-Metabolism franchise with the potential to become one of the largest products by sales in the Novartis portfolio, leveraging Novartis’ global cardiovascular commercial capabilities. However, the acquisition is also expected to modestly dilute core earnings per share (EPS) vs. a no deal scenario during the next few years as the company invests for a successful launch of inclisiran. Novartis expects the transaction to be significantly accretive to Group core operating income and core EPS in the medium term, driven by sales growth and operational synergies, leveraging the worldwide footprint of the cardiovascular business.
Marie-France Tschudin, president, Novartis Pharmaceuticals, comments: “Novartis has a longstanding history of delivering breakthrough cardiovascular treatments for patients, and I am very excited about the opportunity to add inclisiran to our cardiovascular portfolio. This transformational, new investigational medicine has the potential to meaningfully address one of the largest areas of underserved patient need. We believe our strong capabilities and global footprint can help drive broad worldwide access to this much needed treatment.”
The transaction is expected to close in the first quarter of 2020, subject to the satisfaction or waiver of all closing conditions. Until closing, Novartis and The Medicines Company will continue to operate as separate and independent companies.