The most expensive acquisition ever! Is Astellas getting its $5.9 billion worth?

In the past half a month, the share prices of eye care companies have been skyrocketing, and many big names, such as Gulen, have added their shares to the ophthalmic field, making eye care a hot spot in the pharmaceutical industry.
On May 1st Astellas made a big splash, buying IvericBio for $5.9 billion, the biggest acquisition since Astellas was founded, in an ambitious bid to take on one of the world's leading ophthalmology firms.

Blindness and regeneration
A key step in building an ophthalmic kingdom

The deal, which is expected to close in the third quarter of this year, is understood to have been approved by the boards of both Astellas and IvericBio. Upon completion of the acquisition, IvericBio will become an indirect wholly owned subsidiary of Astellas. The deal will be financed by bank loans, commercial paper and cash on hand, Astellas said, noting that it expects to repay the debt over the next five to seven years.

Notably, Astellas is offering $40 per share in cash for all of IvericBio's outstanding shares, which represents a 64% premium to IvericBio's unaffected closing price of $24.33 on March 31, 2023. Represents a 75% premium to IvericBio's volume weighted average price for the 30 trading days ending March 31, 2023.

Even 75% premium could not stop Astellas acquisition steps, so Astellas strategic layout is very clear.

Astellas has identified five key areas of focus, including "blindness and regeneration", and is actively prioritising investment resources in these areas. In 2015, Astellas acquired OcataTherapeutics, a U.S. stem cell technology company, for an estimated $379 million and advanced its cellular therapy for geoatrophy (GA) secondary to age-related macular degeneration (AMD) into phase II clinical trials. The acquisition of IvericBio is the second and crucial step in Astellas' vision of Blindness and Rebirth.

New therapies in the field of ophthalmology
The secret to IvericBio's $5.9 billion value

It is understood that IvericBio announced in February 2023 that the US Food and Drug Administration (FDA) accepted submission of its submitted ACP New Drug Application (NDA) for the treatment of geodesic atrophy secondary to age-related macular degeneration. Currently, NDAs have been given priority review, and the Prescription Drug User Fee Act (PDUFA) target date is August 19, 2023.

NaokiOkamura, President and CEO of Astellas, has high hopes for the ACP New Drug program, stating: IvericBio has promising programs, including AvacincaptadPegol (ACP), an important program for the treatment of geodesic atrophy (GA) secondary to age-related macular degeneration (AMD), and capabilities across the entire value chain in the ophthalmology field. We believe this acquisition will enable us to provide greater value to patients with eye diseases at higher risk of blindness.

ACP is a complement C5 inhibitor that has great potential to provide value to a large number of underserved patients and is currently being evaluated by the FDA for safety and efficacy. ACP previously met its primary efficacy endpoint in two pivotal clinical trials to be statistically significant and received breakthrough treatment designation from the FDA for that indication.

By targeting C5, ACP has the potential to reduce the activity of the complement system that leads to retinal cell degeneration and has the potential to slow GA progression.

But while IvericBio has a promising project, Astellas should not be taken lightly. Apellis Pharmaceuticals announced in February that the FDA approved its development of a drug called Syfovre, also used to treat map-like macular atrophy caused by age-related macular degeneration. ApellisPharmaceuticals beat IvericBio to FDA approval for the first treatment for geodesic atrophy, and it was also rated by Evaluate as one of the 10 potential blockbuster therapies to be approved by 2023.

However, the pressure of Astellas does not need to be too great. Although both Syfovre and ACP are complement inhibitors, the former mainly acts on C3 protein and the latter on C5 protein.

summary

From an industry perspective, the acquisition is a win-win for both Astellas and IvericBio. For Astellas, it lays the foundation for expanding its global presence, contributing to research and development in the field of ophthalmology, and enhancing its competitiveness in the global market. For IvericBio, joining Astey will provide a broader prospect for its business and projects, as well as access to more resources and support.

The acquisition is expected to bring more opportunities to Astellas and IvericBio, as well as more benefits to eye patients around the world.