Bullishness was in the air on the stock market on Tuesday, but you’d hardly know that from the performance of Biogen (NASDAQ: BIIB). The healthcare sector mainstay saw its share price slump by over 2% that trading session, in contrast to the gravity-defying S&P 500 index’s nearly 3% increase. Investors were clearly unimpressed with the company’s latest acquisition news.
Biogen announced prior to market open that it has agreed to acquire a peer, Apellis Pharmaceuticals (NASDAQ: APLS). The agreed price is $41 per share, payable in cash, valuing the deal’s total at roughly $5.6 billion. Apellis investors will also receive a non-transferable contingent value right for each share they hold; this will entitle them to receive two payments of $2 per share if Apellis’s star Syfovre drug meets certain sales benchmarks.
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Apellis currently has two Food and Drug Administration (FDA)-approved treatments on the U.S. market. In addition to Syfovre, which targets geographic atrophy (GA) secondary to age-related macular degeneration (AMD; an eye disorder), it also has Empaveli.
This drug, which like Syfovre is based on the active ingredient of pegcetacoplan, is FDA-approved for three rare afflictions, blood disease paroxysmal nocturnal hemoglobinuria (PNH) and kidney disorders C3 glomerulopathy (C3G) and primary IC-MPGN.
As with many deals in the pharmaceutical world, this one is driven by those two successful drugs. Biogen quoted CEO Christopher Viehbacher as saying that “The addition of Apellis expands our growth portfolio in immunology and rare disease with two approved, best-in-class medicines that complement our existing portfolio and bolster our near-and long-term growth potential.”
Biogen is a company in transformation, shifting from its previous strength in the multiple sclerosis market to growth products in therapeutic areas such as Alzheimer’s and postpartum depression. Yes, $5.6 billion is a large chunk of change, but it shows Biogen’s commitment to its pivot, and the two products it’s getting are valuable. I’d be less bearish on its future than many investors were on Tuesday.
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