Global Insight Perspective | |
Significance | Novartis' takeover offer for the U.K. specialist in developing drugs against hard-to-treat, hospital-acquired infections will bolster the Swiss company's biologics pipeline and anti-infective drug portfolio, with the addition of two key late-stage investigational drugs; Mycograb and Aurograb. |
Implications | The bid, which has the backing of NeuTec’s board of directors and some shareholders, will allow Novartis to capitalise on the fast-growing sections of the anti-bacterial and anti-fungal markets. |
Outlook | This move highlights Novartis’ reputation as an aggressive acquirer of drugs, in the wake of inking another agreement to obtain the rights to a hepatitis C drug, Albuferon. Further acquisitions are expected as Novartis continues to cement its position in the anti-infectives market. |
Mycograb, Aurograb: Jewels in NeuTec’s Crown
Switzerland-based Novartis has announced a recommended cash offer to acquire 100% of the U.K. biopharmaceutical NeuTech in a deal worth approximately £305 million (US$ 569 million), in a further push to strengthen its infectious-disease basket of offerings.
The cash offer of £10.50 per share, valuing NeuTec’s entire issued share capital at about £305 million, was wholeheartedly supported by the U.K. firm’s Board of Directors. Support has also been expressed by shareholders with 39% in NeuTec, who intend to accept the offer.
This proposed acquisition sees Novartis take hold of NeuTec’s most advanced product, Mycograb, currently awaiting European Union (EU) regulatory approval to treat invasive candidiasis, a life-threatening fungal infection caused by the Candida species. The U.S. filing of Mycograb has been earmarked for 2009. According to Novartis, the drug will face competition in the systemic-mycoses segment of the antifungal market, which notched up sales of US$ 1.7 billion last year in the company's top seven countries.
Aurograb is another jewel in NeuTec’s crown, developed in order to target Staphylococcus aureus, including the difficult-to-treat strains of the hospital-acquired bacterial infections induced by Methicillin-Resistant Staphylococcus Aureus (MRSA). This constitutes a fast growing section of the antibiotics market, with sales of US$1.5 billion in the top seven markets, Novartis said. Aurograb is expected to be filed for approval in the EU and U.S. in 2009.
Both drugs, which are twice-daily intravenous, genetically recombinant antibody fragments, known as 'grab', will bolster Novartis’ biologics pipeline and anti-infective drug portfolio, according to the company’s CEO, Daniel Vasella. Meanwhile, James Burnie, CEO of NeuTec, believes that the biotech's products based on naturally-occurring antibodies are "well suited to address" the increasing move of hospital-acquired infection treatments towards combination therapies in order to prevent occurrence of resistance.
Outlook and Implications:
The acquisition of NeuTec, which was established in 1997, will strengthen the Swiss drug maker’s position in the anti-infectives drug market. The U.K. biotech is something of a gem among biotechs, having a number of late-stage investigational drugs that have not yet been developed in partnership with a large pharmaceutical firm.
The takeover offer falls in line with Novartis’ overall strategy of bolstering its portfolio of infectious-disease treatments, particularly of hepatitis and life-threatening infections. Just yesterday (6 June), Novartis announced a US$ 507-million deal for buying rights to a hepatitis C drug Albuferon from U.S. biotech Human Genome Sciences.
In June, the Swiss drug maker entered into collaboration with Arrow Therapeutics (Australia) for another important drug designed to treat hospital-acquired infections. Novartis also recently secured a deal worth US$ 525 million with Idenix Pharmaceuticals (U.S.) for another experimental hepatitis C treatment. Through the recent acquisition of U.S. vaccines-specialist Chiron, the Swiss firm also obtained the European rights to Cubicin, which belongs to a new class of antibiotics.