Denmark’s Novo Nordisk, the world’s biggest maker of insulin, went public with a €2.6bn ($3.1bn) bid for Belgian biotech group Ablynx yesterday as it seeks to bolster its treatments for rare blood disorders.
Ablynx said it rejected Novo’s latest takeover approach and analysts predict the Danish group, whose new chief executive is seeking growth by buying drugs developed by competitors, might face counter-bidders and would need to raise its bid.
The approach comes at a time of renewed interest by large drug makers in smaller biotech firms, with US-based Celgene clinching a deal to buy Impact Biomedicines for up to $7bn on Sunday and Japan’s Takeda Pharmaceutical agreeing last week to buy another Belgian biotech group TiGenix for $630mn.
Novo has offered up to 30.50 euros per share for Ablynx, which represents a 60 per cent premium to the Belgian company’s December 6 share price, before its first approach.
Ablynx shares were suspended until further notice by Belgium’s market regulator yesterday and last traded at €21.20 on Friday.
Ablynx said in a statement that its board “unanimously concluded that the proposal fundamentally undervalues Ablynx and its strong prospects for continued growth and value creation”.
The Belgian group specialises in the research of novel drugs based on nano-bodies found in the immune systems of llamas and alpacas, for which it partners with several of the world’s largest pharmaceutical companies.
The main attraction for Novo is Ablynx’s experimental drug caplacizumab for the rare bleeding disorder acquired thrombotic thrombocytopenic purpura, which would complement Novo’s line-up of blood products focused on haemophilia.
The $11bn haemophilia market is facing upheaval and Novo stands to lose sales following approval of a new Roche drug Hemlibra.
Biopharmaceutical treatments, led by haemophilia, make up around 20% of Novo’s sales, with diabetes and obesity products accounting for the remaining 80%.
“We have solid growth in our diabetes and obesity business but we are struggling a little bit to maintain the same level of growth momentum in biopharma,” Novo’s chief financial officer Jesper Brandgaard said.
The Danish company said it would pay €28.00 per share in cash for Ablynx and an additional €2.50 in a so-called contingent value right (CVR) if certain conditions related to other drugs in Ablynx’s research portfolio were met.
An acquisition would be the first by Novo Nordisk CEO Lars Fruergaard Jorgensen, who took over a year ago.
He has said the firm needs external innovation to broaden its product line-up.
Under previous chief executive Lars Rebien Sorensen, Novo sat out a spate of deal-making across the drugs industry and instead focused on its market-leading position making insulin and other diabetes treatments.
But in March, the company approached Global Blood Therapeutics, a US biotech company focused on serious blood disorders, to discuss a potential takeover, people familiar with the situation said.
Finance chief Brandgaard said the current bid could be revised if Ablynx agreed to engage in talks.
“I think it would be natural to update the bid following a detailed discussion with the board of directors of Ablynx,” he said on a conference call, adding that it would be premature to speculate on any increase.
Brandgaard also played down the threat of an interloper, saying: “In terms of counter proposals it is not our understanding that any other bidder is pursuing the target.”
Ablynx had already rejected an offer by the Danish group on December 14 and Novo Nordisk said the new bid, made on December 22, was some 14% higher.
“Novo Nordisk regrets that the board of directors of Ablynx has so far declined to engage in any discussions, despite the proposals which have been put forward,” it said in a statement.
Analysts at Jefferies said they had a fair value of Ablynx at €29 per share, rising to €36 under a long term upside scenario.
“We envisage Novo needing to hike the offer and could see counterbids,” the analysts said.
Tax breaks and other incentives have created a thriving biotech industry in Belgium, with many companies spun off from university projects now listed on its stock exchange.
Ablynx’s shares have almost doubled in price in the past 12 months, buoyed by successful clinical trial data.
Its products, which are all still undergoing medical trials, target many different diseases such as rheumatoid arthritis, psoriasis or cancer.