Sanofi confirms deal to buy Bioverativ for $11.6 billion

Sanofi confirms deal to buy Bioverativ for $11.6 billion

Andrew Cummings
January 23, 2018

The purchase by Sanofi is meant to strengthen Sanofi's thriving portfolio of treatments for rare diseases and help it develop new drugs for other rare blood disorders. The U.S. headquartered healthcare enterprise, for the record, has made a humungous profit of nearly United States dollars 274.8 million from two of its products dedicated for hemophilia in the third quarter revenue.

Sanofi said the sector had around $10 billion in annual sales, with 181,000 people affected worldwide, and haemophilia represented the largest market for rare diseases, set to grow by more than 7 percent per year through to 2022. The firm offers ELOCTATE, an antihemophilic factor Fc fusion protein; and ALPROLIX, a coagulation factor IX (Recombinant) Fc fusion protein for the treatment of hemophilia A and B. It has a 15.65 P/E ratio. In 2016, Bioverativ generated $847 million in sales and $41 million in royalties. The firm markets both products in the U.S., Japan, Canada and Australia, and plans to expand into more territories. The therapies are also commercialized in the European Union and other countries under a collaboration agreement.

Sanofi is now developing its RNA-based therapy, fitusiran, for treating haemophilia.

Sanofi says it will be able to leverage Bioverativ's clinical expertise and platform to advance fitusiran, an investigational RNA interference (RNAi) therapeutic for hemophilia A and B, with or without inhibitors. We note that Sanofi, earlier this month, gained global development and commercialization rights to fitusiran after it restructured its rare disease alliance with Alnylam Pharmaceuticals, Inc.

The deal comes as part of Sanofi's plan to reshape its portfolio by 2020 by focusing on areas where it either now has, or believes it can effectively build, a leadership position. (BIVV - Free Report), which is focused on developing therapies for hemophilia and other rare blood disorders.

The company's quarterly revenue was up 27.2% compared to the same quarter last year. equities analysts expect that Bioverativ will post 2.69 earnings per share for the current fiscal year.

Sanofi said it expected to achieve a return on its invested capital (ROIC) in excess of the cost of capital within three years. The company expects to preserve its strong credit rating. Boehringer also paid Sanofi 4.7 billion euros in cash.

Sanofi added it would fund the takeover with a mixture of existing cash resources and a debt issue.

But although pricey, the acquisition will still leave Sanofi with enough financial firepower to go after other acquisition targets, Jefferies said. But, despite the qualms of some shareholders, the Bioverativ deal marks a turnaround in Sanofi's investment fortunes. Weil, Gotshal & Manges LLP is serving as legal counsel to Sanofi. Weil, Gotshal & Manges LLP is Sanofi's legal counsel and Paul, Weiss, Rifkind, Wharton & Garrison LLP is legal counsel to Bioverativ.

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