Trust favourite Alexion acquires complentary player Achillion
Rare disease specialist and investment trust favourite Alexion Pharmaceuticals (NASDAQ:ALXN) has notched up its second business development transaction in a just over a week, with a $1bn deal to acquire the smaller US competitor Achillion Pharmaceuticals (NASDAQ:ACHN). The acquisition follows the option deal covering StealthBioTherapeutics’ Phase II stage drug elamipretide for mitochondrial diseases, which was signed last week.
Alexion has agreed to acquire Achillion for $930m in cash – effectively $700m net of the target’s $230m of cash – and two contingent value rights (CVRs) potentially worth $140m each. These are payable on the approval of the target’s lead product and a Phase II initation of its second R&D programme.
Alexion is one of the most popular portfolio companies for the UK’s specialist funds. It is the seventh largest holding at International Biotechnology Trust (IBT, 3.5% of NAV), the ninth largest at Biotechnology Growth Trust (BIOG, 3.6% of NAV), and the fourth largest holding for Worldwide Healthcare Trust (WWH, 3.9% of NAV), based on end August factsheets.
Achillion is developing oral small molecule Factor D inhibitors for complement-mediated rare diseases, such as paroxysmal nocturnal hemoglobinuria (PNH) and C3 glomerulopathy (C3G). It has two clinical-stage medicines in development, including danicopan (ACH-4471), whcih is in Phase II studies, and ACH-5228 in Phase I.
Alexion is, however, the dominant player in complement-focused rare disease with the C5 antibody Soliris, which is approved for three rare conditions: PNH, atypical haemolytic uraemic syndrome (aHUS) and myasthenia gravis. Alexion is facing looming biosimilar competition, although Alexion has launched a long-acting version of the drug called Ultomiris, which it hopes patients will have switched to before this arrives. There company also potenital competition from other complement targeting molecules, such as zilucoplan, a peptide inhibitor of complement component 5 (C5) from Ra Pharmaceuticals. Coincidentally, Ra Pharma agreed to be acquired by Belgium’s UCB last week, in a deal worth $2.1bn (net of cash). Zilucoplan is currently in Phase III studies.
Alexion’s and UCB’s deals will both be subject to normal antitrust review, which are likely to be heightened by the fact the two deals will reduce the number of complement players, with Alexion holding five of the ten molecules currently in clinical development for complement mediated diseases.