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BY OUR PHARMA CORRESPONDENT 24
April,2007:
In what could be termed one of the big ticket
acquisitions in the global pharmaceutical
industry, AstraZeneca PLC successfully reached a
deal with US drug firm MedImmune, Inc. to acquire
all of the latter’s fully diluted shares. In this
all-cash transaction, The Anglo-Swedish drug giant
will acquire the shares of MedImmune common stock
at a price of $58 per share, for a total
consideration of approximately $15.6 billion
(including approximately $340m net cash).
MedImmune is a biotechnology company with revenue
in 2006 of $1.3bn, profit before tax of $75m and
gross assets of $3.0bn.
According to analysts, the deal with significantly
strengthen AstraZeneca’s biologics strategy. The
combination of MedImmune with AstraZeneca’s
wholly-owned subsidiary Cambridge Antibody
Technology (CAT) will create a world-class, fully
integrated biologics and vaccines business within
the AstraZeneca Group with critical mass in
research, development, regulatory, manufacturing
and global sales and marketing reach, an
AstraZeneca.
The acquisition will also extend AstraZeneca’s R&D
science base to allow it to address novel drug
targets through 3 key technological approaches:
small molecules, biologics and, for the first
time, vaccines. Overall, the combination of
MedImmune with AstraZeneca’s existing capabilities
will be capable of delivering a greater number of
new biologic products to bring benefit to patients
in AstraZeneca’s prioritised disease areas. The
deal is expected to close in June 2007.
“This acquisition represents a transformational
step to deliver our biologics strategy sooner than
anticipated. It creates a leading fully integrated
biologics and vaccines business with critical mass
and enhances AstraZeneca’s R&D science base
through which we will deliver a stronger product
pipeline. MedImmune adds an exciting existing
pipeline, including 2 late-stage products, great
expertise in biologic drug development and state
of the art manufacturing facilities. We look
forward to welcoming MedImmune’s employees into
AstraZeneca and are excited by the potential to
create significant value for all our shareholders,
employees and patients that this acquisition
brings,” said David Brennan, Chief Executive
Officer of AstraZeneca, said
Analysts see a lot of synergies in the acquisition
such expanding R&D capability, strengthening of
drug pipeline and manufacturing as well as
financial and human resource enrichment.
R&D capability:
• Expands and diversifies AstraZeneca’s science
base by establishing an international platform
capable of delivering a greater flow of new
medicines in AstraZeneca’s prioritised disease
areas, embracing small molecules, monoclonal
antibodies, next generation biologics and vaccines
• Natural fit between CAT and MedImmune
• Complementary with existing AstraZeneca
therapeutic area strengths in Oncology, Infection
and Respiratory & Inflammation
• Provides entry into vaccines; through
proprietary live attenuated vaccines capability
• Brings significant regulatory experience in
making Biologics License Applications
• Enhanced biologics capability positions
AstraZeneca as a more compelling licensing
partner, improving AstraZeneca’s externalisation
position
Manufacturing:
• MedImmune is a leader in protein engineering and
biologics manufacturing, with a production
capacity of over 30,000L planned by 2010 and world
leading cell line productivity levels. Through
further modest investment, capacity could be
increased to over 60,000L. This would secure
production requirements for the long-term and
avoid the need for major near-term ‘green-field’
manufacturing investment by AstraZeneca to support
its biologics strategy
Pipeline:
• Adds 2 late-stage assets: the next generation
follow-on to ‘Synagis’, ‘Numax’ and refrigerated
formulation ‘FluMist’ with an anticipated US
launch for 2007-2008 influenza season
• Increases the proportion of biologics in
AstraZeneca’s pipeline from 7 percent to 27
percent and enlarges the total pipeline by 45
projects to 163 projects
• Diversifies and expands R&D capability to
deliver a greater flow of new biologic products
Financial benefits:
• Synergies from the acquisition of MedImmune and
from related AstraZeneca activities are expected
to be towards $500m per annum by 2009
• The acquisition is expected to be cash earnings
enhancing in 2009
• The acquisition will be fully funded in cash,
bringing improved financial efficiency through
balance sheet leverage. Previously announced $4bn
share buyback programme for 2007 unchanged
• Addition of attractive marketed products
including ‘Synagis’ and ‘FluMist’ to AstraZeneca’s
portfolio adds $1.2bn in sales. Consensus sales
growth for this portfolio is forecast at 12% CAGR
to 2010
• Provides AstraZeneca with several other
substantial assets, including a royalty stream on
the sales of the HPV vaccines with estimated
consensus peak sales of $5.5bn, potential
milestones and royalties on MedImmune’s other
licensed products and $1.5bn cash, including
$89.4m relating to MedImmune Ventures investments
at book value
People:
• Strong desire to retain employees and maintain
culture, with emphasis on retaining key talent and
critical skills
• One-time retention grant for employees
• David M. Mott, the Chief Executive Officer and
President of MedImmune, and James F. Young, Ph.D.,
the President, Research and Development of
MedImmune, have committed to remain with MedImmune
and it is expected that other members of
MedImmune’s senior management will stay with the
company following the closing
• David M. Mott will take a leadership role within
AstraZeneca
The acquisition is structured as an all cash
tender offer for all outstanding shares of
MedImmune common stock followed by a merger in
which each remaining un-tendered share of
MedImmune would be converted into the same $58
cash per share price paid in the tender offer. The
acquisition is subject to the satisfaction of
customary conditions, including the tender of a
majority of the outstanding MedImmune shares on a
fully-diluted basis and the expiration or earlier
termination of the Hart-Scott-Rodino waiting
period and other regulatory approvals. The tender
offer will be commenced within 10 working days and
is expected to close in June 2007, unless
extended. The tender offer is not subject to a
financing contingency.
The acquisition price represents a premium of
approximately 53.3% to MedImmune’s closing share
price of $37.84 on 11th April, 2007, this being
the last business day prior to MedImmune’s
announcement to explore strategic alternatives.
The transaction has been unanimously recommended
by the Board of Directors of MedImmune. The
acquisition will be effected pursuant to a merger
agreement. The merger agreement contains certain
termination rights for each of AstraZeneca and
MedImmune and further provides that, upon
termination of the merger agreement under
specified circumstances, MedImmune may be required
to pay AstraZeneca a termination fee of $450
million.
The total consideration for the acquisition of
MedImmune amounts to approximately $15 billion in
cash. AstraZeneca will draw from a committed
banking facility in the amount of $15 billion to
provide the initial financing for the acquisition.
BY OUR PHARMA CORRESPONDENT |
