Prosensa Holding N.V. (RNA) saw its shares jumping 62.6% on a buyout offer from BioMarin Pharmaceutical Inc. (BMRN). The companies have signed a definitive agreement under which BioMarin will acquire Prosensa in a cash transaction valued at about $680 million or $17.75 per share. The offer price represents a huge premium of 55 % over Prosensa’s Nov 21 closing price of $11.44. BioMarin’s shares were up 2.5% on the announcement.
Financial Details
In addition to $680 million, Prosensa shareholders are eligible to receive two regulatory milestone payments of approximately $80 million on the approval of lead candidate, drisapersen. The payments depend on drisapersen’s U.S. approval by May 15, 2016, and EU approval by Feb 15, 2017.
Moreover, BioMarin will purchase a $50 million convertible note from Prosensa within five days of signing the agreement, which will be converted into almost $4.4 million shares of Prosensa stock if the deal falls apart.
The deal, which is slated to close in the first quarter of 2015, is expected to be accretive to BioMarin’s earnings beginning 2017 assuming drisapersen gains early approvals.
How Will BioMarin Benefit?
The Prosensa acquisition will add Duchenne muscular dystrophy (DMD) candidate, drisapersen, to BioMarin’s portfolio. As per the company, DMD is estimated to affect nearly 75,000 people across the world and up to 1 infant in 3,500 live male births. No therapy has yet been approved for this disorder.
A rolling new drug application (NDA) for drisapersen is currently being submitted with the submission expected to complete in the first quarter of 2015 and a couple of confirmatory studies are expected to commence in the first half of 2015. The drug has Fast Track status and Breakthrough Therapy designation in the U.S. and has been granted orphan status in the U.S., EU, Japan and Australia.
With this acquisition, BioMarin will also gain worldwide rights to Prosensa’s multiple orphan drug candidates that have the potential to be developed for the treatment of various genotypes of DMD and other genetic disorders.
Our Take
The addition of drisapersen will further expand BioMarin’s rare-disease portfolio. Drisapersen has the potential to address up to 13% of the DMD population or 10,000 patients. However, companies like Sarepta Therapeutics, Inc. (SRPT) are developing therapies targeting the DMD market.
BioMarin currently carries a Zacks Rank #2 (Buy). A better-ranked stock in the health care sector is Biogen Idec Inc. (BIIB) carrying a Zacks Rank #1 (Strong Buy).
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