IHS Global Insight Perspective | |
Significance | The higher offer is endorsed by CV Therapeutics' (CVT; U.S.) board of directors, and a merger is expected once the tender offer is completed. Gilead Sciences indicated that the transaction will be profitable for the firm from 2011 and beyond. |
Implications | Gilead will inherit CVT's Ranexa (ranolazine extended-release tablets) and Lexiscan (regadenoson injection) and a 10-drug-strong research and development pipeline. |
Outlook | With Astellas launching a hostile takeover of CVT in recent weeks, Gilead can expect some opposition to the acquisition from the Japanese firm in the form of a potential higher offer. Until then, the short-term focus will be on completing the tender offer and integrating the new firm. |
The trend towards mergers and acquisitions in the pharmaceutical world continues, with the announcement of Gilead Sciences acquiring CV Therapeutics for a reported US$20 per share, with a total value of US$1.4 billion. The move has been unanimously approved by CV Therapeutics' (CVT) board of directors, pursuant to a tender offer. The acquisition will see CVT become a wholly-owned subsidiary of Gilead in due course.
Through the acquisition, Gilead will inherit two of CVT's promising products in its portfolio—Ranexa and Lexiscan—which constitute the majority of CVT's 2008 revenues of US$154.5 million. Ranexa is particularly promising, as the marketing of the product is now extended to the United Kingdom and Germany. Ranexa registered sales of US$109.3 million net. Other contributors to CVT's topline include the US$18.8 million in royalty and licensing primarily earned from TPG-Axon Capital and collaborations with Astellas and Menarini. The firm also recorded US$26.5 million from milestone payments, collaborations, and other revenues, benefitting from the FDA approval of Lexiscan and a development milestone from Biogen Idec for its experimental drug Adentri.
CV Therapeutics' R&D Pipeline as of November 2008 | ||
Experimental Candidate | Indications/Therapeutic Area | Phase of Development |
Tecadenoson | PSVT | Phase III |
Atrial Fibrillation | Phase II | |
Adentri | Heart failure | Phase III |
CVT-6883 | Cardiopulmonary disease | Phase I |
CVT-3619 | Diabetes/metabolic Syndrome | Phase I |
CVT-10216 | Alcohol Addiction | Preclinical |
Late I (NA) | Coronary Artery Disease | Preclinical |
DES Program | Restenosis | Preclinical |
ABCA 1 | Atherosclerosis | Preclinical |
Enzyme target | Obesity/metabolic syndrome | Preclinical |
A (2A) antagonist | Chemical dependence | Preclinical |
Source: CV Therapeutics website | ||
The Astellas Bid
Japanese pharma firm Astellas Pharma launched a bid to takeover CVT in late January this year, encouraged by its existing collaborations with the U.S. firm. The opportunity seemed to provide encouragement to the Japanese firm, which offered US$1 billion in cash for CVT. However, the deal was unanimously rejected by the CVT's board noting that the acquisition figure "undervalued" the firm. Astellas persisted with the bid and launched a tender offer to acquire outstanding shares of CVT, and also proceeded to propose the removal of CVT's chief executive officer Louis Lange and director, founder Thomas Shenk, and four other members in the next annual general meeting. Gilead Sciences' offer which is a 25% premium over Astellas, has well and truly put the Japanese pharma firm's plans of a hostile takeover of CVT in the cold, at least for the time being.
Outlook and Implications
The development offers a range of positives for Gilead Sciences, particularly in increasing the scope of its product portfolio—both marketed and in research and development (R&D). Presently, Gilead has a strong presence in anti-viral drugs, with a franchise in HIV/AIDS drugs, and the development of Tamiflu (oseltamivir) through collaboration with Roche. CVT's strengths mainly lie in the cardiovascular market with its Ranexa providing the primary impetus. The product will be a valuable addition to the Gilead cardiovascular franchise, which mainly consists of the pulmonary arterial hypertension drug Letairis (ambrisentan), which recorded sales of US$112.9 million in 2008.
The combined entity will have total revenues of US$5.494 billion to start with. CVT's R&D pipeline adds another dimension to future prospects for the enterprise. Its two Phase III drugs—Tecadenoson and Adentri—provide the most promising addition to the company's product portfolio in the short term. The R&D pipeline of CVT is also weighted in the cardiovascular therapeutic area, with more than half of its pipeline in the discovery or pre-clinical stage.
In the short term, while the Gilead Sciences bid has been accepted by CVT's board and recommended to shareholders, there is no certainty that the acquisition will go without a hitch, mainly because Astellas Pharma could increase its offer. However, by launching a hostile takeover of CVT in the first months of this year, Astellas may find itself out of favour with CVT's board. Meanwhile, Gilead is expected to push ahead with its tender offer to seal the deal completely. Other areas of concern will be the various collaborations that CVT has with Astellas Pharma and Menarini (Italy) for development and commercialisation of drugs.
The move by Gilead Sciences reflects the general mood in the pharmaceutical world towards acquisition and merger of firms, driven by lower valuations. Big-ticket acquisitions, such as that of Pfizer-Wyeth and Merck & Co-Schering-Plough, have set the tone for greater consolidation in the market, which will intensify in the coming months. The activity is driven by the increasing challenges of generic competition and a dry late-stage R&D pipeline for pharma firms.
Related Articles
- United States - Japan: 10 March 2009: Astellas Acquisition of CV Therapeutics Gets Hostile with Proposed Board of Director Changes
- United States - Japan: 2 March 2009: Astellas Launches Tender Offer for CV Therapeutics Acquisition, Files Lawsuit Against CV
- United States - Japan: 28 January 2009: Astellas Launches Unsolicited US$1-bil. Cash Bid to Acquire CV Therapeutics