IHS Global Insight Perspective | |
Significance | U.S. major Abbott has confirmed the takeover of Facet Biotech (U.S.). The transaction is valued at US$450 million in net payments plus US$272 million in projected cash and securities |
Implications | Abbott's acquisition of Facet is expected to boost the company's pipeline development within the biotech sector, particularly the therapeutic areas of oncology and immunology. |
Outlook | The Abbott-Facet deal is a clear reflection of Abbott's strategy of development which has focused upon inorganic growth, portfolio expansion and product diversification. Facet's pipeline development will provide an important complement to Abbott's current products and strengthen its role in providing next-generation biologics treatment . |
U.S. major Abbott has confirmed the acquisition of U.S. firm Facet Biotech for US$450 million in cash payments in addition to US$272 million for projected cash and marketable securities (expected by the time of consolidation). As stated by the company, this acquisition will bring positive opportunities to boost its pipeline growth, particularly for pharmaceutical products at the early-to-middle stage of development in the therapeutic areas of oncology and immunology.
Abbott is expected to start a tender offer to acquire all of Facet's outstanding shares, according to the terms of the contract. The price for each share is valued at US$27. The final deal has been approved by the boards of directors of both companies and is expected to close sometime during the second quarter of this year.
Areas of Strength
Abbott's acquisition of Facet brings important opportunities to boost the company's participation within the biotech sector and build up treatment focus on next-generation small molecules and biologic compounds. Looking into immunology and autoimmune diseases, multiple sclerosis (MS) humanised antibody daclizumab remains a central part of the deal. Daclizumab works by binding the IL-2 receptor and inhibiting its activity on activated T-cells. According to various studies, daclizumab has shown significant potential to reduce inflammatory lesions associated with MS with a high safety profile for patients. The medication, which is jointly developed with Biogen Idec, is currently undergoing Phase II trials and is moving into Phase III some time during the second quarter.
Looking into oncology, Facet Biotech enjoys several partner agreements for the development of early-to-mid-stage compounds to treat various cancer types such as multiple myeloma and chronic lymphocytic leukaemia.
In addition to Biogen, Facet Biotech enjoys collaboration agreements with Bristol-Myers Squibb (BMS, U.S.) and Trubion Pharmaceuticals (U.S.), with whom it signed a co-development agreement (US$200 million) for Phase I experimental candidates for chronic lymphocytic leukaemia.
Outlook and Implications
Abbott's takeover of Facet Biotech reflects the company's strategy of development, which emphasises inorganic growth, portfolio expansion and product diversification. Facet joins companies such as Solvay (Belgium), Evalve (U.S.), Visiogen (U.S.) and Advanced Medical Optics (AMO), which have been recently acquired (in the past year and a half) by the firm.
Abbott's successful agreement to acquire Facet Biotech follows failed attempts from Biogen (Facet's licensing partner since 2005) to take over the firm. Despite aggressive efforts to seal the deal, including boosting the initial offer from US$14.50 per share to US$17.50 per share (21% growth) and plans to run a proxy contest to replace Facet's major board of directors, Biogen's offer was found to be "inadequate" (see United States: 9 September 2009: Facet Biotech Rejects Biogen's US$355-mil. Bid and United States: 7 December 2009: Biogen Idec Ups the Ante with Higher Offer for Facet Biotech). Conversely, Abbott's proposal has met Facet's financial expectations and provided an opportunity to "re-vindicate" its value.
This acquisition deal brings an open door to boost Abbott's role within key therapeutics areas in the market. Looking into immunology-related treatments, Abbott's expertise and success in developing anti-TNF biologic Humira will provide a strong platform for expansion. In this sense, the development of daclizumab is expected to complement Humira's further developments, which include new treatment indications.
Meanwhile, Facet's proficiency in the oncology area is expected to provide Abbott with a significant scope to expand its participation within the sector and boost the development of less damaging targeted treatments. Looking into this area, Abbott's success has been evident in the area of diagnostics (see United States: 9 February 2010: Abbott Submits New Ovarian Cancer Test for FDA 510 Clearance and United States: 4 March 2010: GSK and Abbot to Develop Diagnostic Test for Skin Cancer). Products which are currently in its pipeline include ABT-263 (Bcl-2 family protein antagonist), ABT-869 (multi-targeted kinase inhibitor) and ABT-888 (a PARP-inhibitor).