The Medicines Company To Be Acquired By Novartis For $9.7B

The Medicines Company (NASDAQ:MDCO) announced that it has entered a definitive agreement with Swiss pharma giant, Novartis (NYSE:NVS) , per which it will be acquired by the latter in an all-cash transaction worth approximately $9.7 billion on a fully diluted basis. The acquisition, if successful, will add The Medicines Company’s promising cholesterol candidate, inclisiran, toNovartis’ portfolio. Per the agreement, Novartis will pay $85 per share, a premium of 24% to the closing price on Nov 22.

The acquisition is expected to close in the first quarter of 2020.

Shares of The Medicines Company rallied almost 20% on Nov 19 following a Bloomberg report about rumors of this acquisition. Shares of The Medicines Company have skyrocketed 258.2% so far this year versus flat growth by the industry.

The company divested all its marketed products in 2018 to focus on the development of PCSK9 inhibitor, inclisiran. This initiative has primarily driven its share price so far this year, on the back of impressive progress of inclisiran. This acquisition offer also suggests a good return to the company’s shareholders.

Moreover, the acquisition of inclisiran by Novartis will boost the candidate’s prospects, following its potential approval, as the company has a strong position in the market and cash resources to support the launch and counter competition compared to The Medicines Company.

Notably, The Medicines Company has a partnership with Alnylam Pharmaceuticals (NASDAQ:ALNY) for the development of PCSK9 inhibitor, inclisiran. In 2013, The Medicines Company had acquired exclusive, worldwide right to inclisiran from Alnylam in exchange for development, regulatory and commercialization milestones. We expect Alnylam to continue to receive payments related to future milestones from Novartis, following the completion of the acquisition.

The Medicines Company has completed three pivotal studies on its sole pipeline candidate, inclisiran, as a potential treatment for lowering LDL-C (bad cholesterol). Data from the studies showed that 18 months of treatment with the candidate led to a reduction in LDL-C level of more than 50% in patients with heterozygous familial hypercholesterolemia (HeFH) and atherosclerotic cardiovascular disease (ASCVD). Regulatory applications seeking approval for inclisiran are expected to be filed in the United States in the fourth quarter of 2019 and Europe during the first quarter of 2020.

However, inclisiran is likely to face competition from other FDA-approved PCKS9 inhibitors like Sanofi/Regeneron’s Praluent and Amgen’s (NASDAQ:AMGN) Repatha. We note that inclisiran will allow much less frequent dosing in patients compared to Praluent and Repatha. While Praluent and Repatha are approved with once every two weeks or once a month dosing, inclisiran has been developed for twice-a-year dosing. This is likely to give inclisiran an upper hand following its commercial launch.

Zacks Rank

The Medicines Company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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