Japan second biggest drugmaker Astellas Pharma to acquire Audentes Therapeutics for $3 billion

Japan’s Astellas Pharma Inc is set to acquire Audentes Therapeutics Inc for around $3 billion in a deal aimed at boosting genetic medicines – a key area of growth.

Gene therapies are one of the hottest areas of drug research.

Astellas, Japan’s second-largest drugmaker by sales, is offering $60 per share for San Francisco-based Audentes, representing a premium of 110% to its closing price on Monday.

Although the deal looks expensive, opined Hidemaru Yamaguchi, an analyst at Citi, he went on to add, it was a positive move for Astellas as Audentes had “cutting-edge gene therapy modalities”.

“We thought it was only a matter of time before Astellas entered the gene therapy market, given its licensing of development rights for a domestic gene therapy in ALS and other moves,” wrote Yamaguchi in a note for clients.

Gene therapies are aiming to cure diseases by replacing the mutated version of a gene found in a patient’s cells with healthy copies. They have the potential to cure deadly illnesses with a single dose, drugmakers say the high price comanded by such therapies, which can go as much as $1 million per patient, are well justified.

Audentes’ investigational drug, AT132, is being developed to treat a rare genetic neuromuscular disorder, which results in extreme muscle weakness, respiratory failure and in some cases early death.

“Audentes has developed a robust pipeline of promising product candidates which are complementary to our existing pipeline, including its lead program AT132,” said Kenji Yasukawa, Astellas’ Chief Executive.

The all-cash deal is expected to close in the first quarter of next year.

The deal is subject to regulatory approval including U.S. antitrust clearance.

Both companies plan on seeking FDA approval for AT312 in mid-2020.

AT312 has shown promising results in the treatment of X-linked myotubular myopathy (XLMTM) seen mainly in male infants.

Assuming a $1 million price tag for the treatment, there are around 40 boys born in the U.S. with such a condition each year, thus it would yield just $80 million in revenue, wrote Jefferies analyst Stephen Barker.

“The $3 billion acquisition price is therefore more likely to be mainly predicated on the firm’s technology platform and manufacturing capabilities,” wrote Barker.

While Covington & Burling LLP is acting as Astellas’ legal counsel, Morgan Stanley & Co LLC has been appointed as its financial adviser.

Centerview Partners LLC is acting as Audentes’ financial adviser while Fenwick & West LLP is its legal counsel.

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