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Astellas Pharma Inc.’s $3 billion acquisition of Audentes Therapeutics is a strong indicator that the pharmaceutical industry’s march into gene therapy development isn’t going to slow down in 2020.
Shares of the Japanese drugmaker 4503, -1.11% fell 1% in morning trading, while Audentes BOLD, +105.16% stock jumped 105% on the news.
Shares of other companies developing gene therapies also rallied this morning; UniQure QURE, +12.86% is up 15% and Sarepta Therapeutics SRPT, +3.36% rose 3%. Solid BioSciences SLDB, -2.78% is down about %.
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The industry’s gene therapy buying spree kicked off in earnest in 2017 with Gilead Sciences’ GILD, -0.42% buyout of Kite Pharma for $11.9 billion. Since then, there have been a number of high profile deals led by legacy drugmakers, such as Novartis’s NVS, -0.51% $8.7 billion purchase of AveXis in 2018 and Roche’s ROG, -1.12% $4.8 billion pending acquisition of Spark Therapeutics ONCE, -0.10%. Spark’s stock is up 1%. In June Biogen BIIB, -0.26% closed its $800 million acquisition of Nightstar Therapeutics.
Yet not all of the recent deals have flown through the regulatory process.
The Spark deal, announced in February, has stalled over what analysts say are regulators’ concerns about the impact of a Roche-Spark tie-up on competition in the hemophilia A market.
“We believe this transaction could signal a return to gene therapy M&A (at least outside hemophilia indications),” SVP Leerink’s Mani Foroohar wrote in a Dec. 3 research note.
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Pipeline-starved drugmakers are drawn to the price tags that come with Food and Drug Administration-approved gene therapies, though many of the marketed therapies are one-time treatments. Novartis’s Kymriah, via the Kite deal, has a list price of $475,000, while Spark’s Luxturna, which treats people with retinal dystrophy, a rare disease that can cause blindness, costs a cool $825,000.
Audentes plans in 2020 to submit applications to the FDA and European Medicines Agency for AT132, an experimental gene therapy for the treatment of X-linked myotubular myopathy, but the deal would also give Astellas access to Audentes’ gene therapy manufacturing facilities. “Any buyer of [Audentes] was likely to be one interested in buying not only leading gene therapy candidates but also technical expertise and manufacturing capacity,” Wedbush analysts wrote.
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Raymond James analysts broke down the deal in two categories, arguing that $1.5 billion is justified by AT132 and the remaining $1.5 billion by a combination of its 200 employees, gene therapy manufacturing capabilities, and a pair of therapeutic candidates for Pompe disease and Duchenne muscular dystrophy, both rare diseases.
“This is just another bullish domino for genetic medicine,” Raymond James analyst Steven Seedhouse wrote in a note. “It may also signal ‘platform value’ is a real thing that shouldn’t be ignored in today’s market.”
The deal, which has been approved by the boards of both companies, is expected to close in the first quarter of next year. Shares of Astellas have gained 35% year-to-date, while Audentes is up 176%. The S&P 500 has risen about 24%.
