In a year that must have deal bankers crying in their beer, Japanese biopharma is providing some solace. Mitsubishi Tanabe Pharma’s $1.1bn takeout of Neuroderm is the third $1bn-plus acquisition of a pure-play pharma this year, even as chief executives of many companies continue to complain of a mismatch between valuation and promise.
The focus of the Israel-based, Nasdaq-listed Neuroderm in Parkinson’s disease makes it an attractive target if its pump-delivered levodopa/carbidopa formulations can improve patients' dyskinesia and “off periods”. EvaluatePharma’s consensus suggests that Mitsubishi Tanabe is making a big bet, as combined 2022 sales are forecast at less than $170m.
Mitsubishi Tanabe’s acquisition brings the amount of cash spent on acquisitions this year by Japanese companies to more than $8bn. The big one, of course, was Takeda’s $5.2bn takeout of Ariad, a company that to its credit was commercial stage, and the other $1bn-plus deal was Sawai’s purchase of Upsher-Smith Laboratories’ generics business.
|Japanese pharma's buying spree|
|Acquiring Company||Target||Deal Date||Value ($m)||Cash Payment ($m)|
|Mitsubishi Tanabe Pharma||Neuroderm||July 2017||1,100||1,100|
|Sawai Pharmaceutical||Upsher-Smith Laboratories generic business||May 2017||1,050||1,050|
|Hitachi||Caladrius Biosciences||May 2017||80||80|
|Astellas Pharma||Ogeda||May 2017||852||852|
|Otsuka Holdings||Neurovance||Mar 2017||250||100|
|Takeda||ARIAD Pharmaceuticals||Feb 2017||5,200||5,200|
|Sumitomo Dainippon Pharma||Tolero Pharmaceuticals||Jan 2017||780||780|
Neuroderm, on the other hand, remains firmly at the development stage. However, it represents a lower-risk asset in that its approach of using liquid levodopa/carbidopa in a subcutaneous continuous infusion pump means that regulators and Parkinson’s disease specialists are familiar with the safety and efficacy profile.
ND0612L is targeting moderate Parkinson’s and ND0612H severe patients. In an investor presentation earlier this year Neuroderm posed its two candidates as alternatives not to oral medications but to deep-brain stimulation or intra-duodenal pumps, both more invasive procedures with potentially greater levels of complications.
Company executives pointed out that deep-brain stimulation devices have sales of $500m a year and intra-duodenal pumps $300m. Neuroderm’s pumps would need to make a serious run at those numbers to justify Takeda’s price tag – EvaluatePharma’s consensus puts sales of ND0612L at $162m and ND0612H at $104m in 2022.
Mitsubishi Tanabe might be thinking of cost savings, however. The group is nearing US launch of its amyotrophic lateral sclerosis injection Radicava next month, so building a franchise around more central nervous system drugs could be a sensible approach – especially since, as with Radicava, the Neuroderm assets represent a lower regulatory risk than many innovative agents.
Biopharma executives and investors throughout the US might be smiling on seeing what Mitsubishi Tanabe was willing to pay. It will do nothing to discourage them from pushing for at least the 17% premium Neuroderm fetched. But as long as big pharma chiefs cannot justify the price, the lull in acquisition activity by US and European companies will continue.