Drugmaker Alexion boosts its rare drug pipeline with $8.4 billion deal

Inside of a Gilead Sciences Lab
An automated machine works on purification of potential hepatitis C virus drug candidate at the Gilead Sciences Inc. lab in Foster City, California, U.S., on Wednesday, Feb. 8, 2012. Gilead acquired Pharmasset Inc. last month for its experimental hepatitis C treatments as it aims to compete with other drugmakers like Bristol-Myers Squibb Co. and Merck & Co. to develop a new class of oral cures for hepatitis C to replace older drugs that require injections. Photographer: David Paul Morris/Bloomberg via Getty Images
Photograph by David Paul Morris — Bloomberg via Getty Images

Drugmaker Alexion Pharmaceuticals Inc said Wednesday it would buy Synageva BioPharma Corp for $8.4 billion to boost its rare drug pipeline.

Alexion’s cash-and-stock offer values Synageva at $225.92 per share — more than double of Synageva closing price of $95.87 on Tuesday.

Makers of drugs that treat rare diseases are attractive because they typically charge hefty premiums for their products.

The deal will give Alexion access to Kanuma – Synageva’s treatment for a rare disease called Lysosomal Acid Lipase Deficiency, where build-up of fatty material in the blood and liver causes unexpected complications and some times early death.

Kanuma’s marketing application is being reviewed in the United States and Europe.

The deal is the latest in a string of M&As in the healthcare sector this year.

Recent deals involving rare disease companies include Teva Pharmaceutical Industries Inc’s $3.5 billion purchase of Auspex Pharmaceuticals in March and Shire’s acquisition of NPS Pharmaceuticals for $5.2 billion in January.

Alexion is offering $115 in cash and 0.6581 of its shares for each share of Synageva.

The deal is expected to add to Alexion’s 2018 profit, while allowing $150 million in cost savings in 2017, the companies said in a statement.

Alexion has received committed financing of $3.5 billion from Bank of America Merrill Lynch and JPMorgan for the deal.

Lazard and JPMorgan were Alexion’s financial advisers, while Goldman Sachs advised Synageva.

Wachtell Lipton Rosen & Katz is Alexion’s legal counsel, while Sullivan & Cromwell LLP and Ropes & Gray LLP are Synageva’s legal counsel.

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