Your Daily Pharma Scoop: Ablynx Takeover Bid, Celgene Acquires Impact Biomedicines, Axovant Flops Again
Jan. 9, 2018 11:02 AM ET| About: Ablynx NV (ABLYF), Includes: ABUS, ACST, AGEN, AGN, AKAO, ALDR, ALNY
Avisol Capital Partners
Long/short equity, newsletter provider, healthcare, biotech
Summary
Ablynx has received a $3.1 billion hostile takeover offer from Novo Nordisk.
Celgene announced the acquisition of privately held Impact Biomedicines.
Axovant announced another failed trial, pushing shares down almost 50%.
This idea was discussed in more depth with members of my private investing community, The Total Pharma Tracker.
Analysis of top Seeking Alpha coverage: Ablynx
Today we will discuss the hostile takeover bid from Novo Nordisk (NVO) for clinical-stage Belgian biotech company Ablynx (OTCPK:ABLYF).
On Monday, Novo made a euro 2.6 billion ($3.1 billion) offer to acquire Ablynx. Novo has offered euro 28 per share to Ablynx after the latter thwarted earlier offers from Novo. Following Ablynx’s stance, Novo decided to go public with its new and improved offer. Ablynx though has rejected the latest offer as well, noting that it undervalues the company. Interestingly, Ablynx shares were trading at around euro 31 at the time of writing this article in Europe, above the Novo offer. The market obviously believes that Novo will raise its offer. Looking at the way such takeovers (hostile) play out in general, we believe Novo is most likely to raise the offer by another 20%-30% in the coming days. That would represent a premium of 75% to Ablynx’s closing price a day before Novo went public with its offer. Last week, another small Belgian biotech company, TiGenix (TIG), was acquired by Japan’s Takeda for a premium of around 75%.
We first covered Ablynx in September last year (read the note here). The note had come out a month ahead of an important catalyst for Ablynx, Phase 3 data readout for caplacizumab in acquired thrombotic thrombocytopenic purpura (aTTP). The market for this indication is worth around $1 billion and Ablynx has already filed a MAA in Europe based on Phase 2 results. The event last year played out as we had expected and Ablynx immediately used the positive news to launch a U.S. IPO. The company had priced its U.S. IPO at $20.95. We believe that the U.S. offering not only provided Ablynx with the financial resources it needed to advance its pipeline but also with much needed visibility among U.S. investors, which we believe is always an issue for promising European clinical-stage biotech companies.
Coming back to Novo’s offer, we believe that this is just a preliminary offer as Novo tests the water. Novo’s deal also includes a euro 2.50 contingent value right (CVR) if certain conditions related to its research portfolio are met.
Ablynx has already released statement on the offer, noting that it undervalues the company. Ablynx has also confirmed that it first received an offer from Novo on December 7, 2017. Novo had offered euro 26.75 per share in cash. Although Novo has sweetened its deal after going public, we believe Ablynx is likely to get a higher offer in the coming weeks. This makes the Belgian biotech an interesting M&A play.
Its lead product candidate, if approved, could generate peak sales of $400 million globally according to Jefferies. Based on the peak sales forecast, Novo is valuing Ablynx at 8x peak sales. This represents a slight premium to the average for the sector, according to NYU Stern data. But we expect the premium to be higher, given some of the recent deals in the biotech space. Remember that we are talking about a company that is on the verge of commercialization.