The biotech sector continues to witness mergers and acquisitions. Earlier this week, Biogen Idec (BIIB) announced its intention to acquire U.K.-based Convergence Pharmaceuticals, a clinical stage biopharmaceutical company with a focus on developing treatments for neuropathic pain.
The Lead Candidate – CNV1014802
Once the acquisition goes through, Biogen will gain access to Convergence’s lead candidate, CNV1014802, which is in phase II development. CNV1014802 has shown clinical activity in proof of concept studies for trigeminal neuralgia and lumbosacral radiculopathy (sciatica).
Apart from CNV1014802, Convergence has a pipeline of differentiated clinical-stage compounds.
Financial Details
Biogen will make an upfront payment of $200 million. Moreover, the company could pay up to $475 million on the achievement of future milestones. The acquisition is expected to close this quarter.
Our Take
We are positive on Biogen’s efforts to expand its portfolio and strengthen its pipeline. The company, which has a strong presence in the multiple sclerosis market, has been focusing on diversifying its product portfolio and pipeline. The company's main R&D focus is on neurodegenerative, immunological, and hematological diseases.
Biogen signed quite a number of deals in 2014 to expand and develop its early/mid-stage pipeline. These include deals signed with companies like Eisai Co., Ltd. (disease-modifying treatments for Alzheimer’s disease) and Sangamo BioSciences, Inc. (SGMO) for the treatment of two inherited blood disorders – sickle cell disease and beta-thalassemia. We believe Biogen will continue to bolster its pipeline through partnerships and in-licensing deals.
Biogen is a Zacks Rank #2 (Buy) stock. Some better ranked stocks in the health care sector include Amgen Inc. (AMGN) and Alexion Pharmaceuticals (ALXN). Both are Zacks Rank #1 (Strong Buy) stocks.
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