Healthcare investors will be well-aware of Valeant’s (VRX) $10 billion acquisition of Salix Pharmaceuticals (SLXP), announced over the weekend, but the Monday morning newsflow has already been crammed with biotech deals.
Valeant will pay $158 per share for Salix in an all-cash deal valued at about $10.1 billion, $14.5 billion on an enterprise value basis. Valeant has relied heavily on an M&A strategy for the last two years, but the Salix deal is by far the largest to date, and the company says it will yield more than $500 million in annual cost savings within six months.
Merck (MRK) announced a $450 million alliance with privately held NGM Biopharmaceuticals to develop and commercialize biologics. Merck will put up $200 million initially ($94 million in cash and $106 million in a new NGM equity stake) to collaborate on a number of drug candidates currently in preclinical development at NGM..
That’s right – the $450 million deal is for preclinical compounds. Merck will have the option to license NGM programs after human proof of concept trials. NGM retains full rights to its lead candidate, NGM282, which is also being developed for non-alcoholic steatohepatitis and primary billiary cirrhosis.
Bristol-Myers Squibb (BMY) announced an agreement to acquire Flexus Biosciences, a privately held company focused on the discovery and development of oncology therapies. BMY will pay $800 million upfront and an additional $450 million in potential milestones.
BMY gets rights to F001287, the smaller company’s lead preclinical IDO1-inhibitor, with an IND filing planned for the second half of 2015. Bristol-Myers Squibb also gets access to Flexus’ IDO/TDO discovery program. Meanwhile, current Flexus shareholders will retain all non-IDO/TDO assets, including Flexus’ Phase 1 FLT3 and CDK4/6 inhibitor; a small-molecule Treg immunotherapy; and the company’s current personnel and facilities.
BMY will also hand over $30 million in a collaboration with the baby biotech Rigel Pharma (RIGL) to discover and develop new cancer immunotherapies. The collaboration centers around Rigel’s portfolio of small molecule TGF beta kinase inhibitors. Rigel will be eligible to receive development and regulatory milestones worth $309 million for a successfully approved compound, plus tiered royalties on sales of any successful products.
Rigel has had a tough go since its IPO in 2000. Even after a 40% gain in early trading on Monday the stock is down 95% over the last decade-and-a-half.
One or more of PropThink’s contributors are long BMY or MRK.
