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Alexion (ALXN) to Acquire Biotech Syntimmune for $1.2 Billion

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Shares of Alexion Pharmaceuticals, Inc. (ALXN - Free Report) gained 5.1% after the company announced that it will acquire a clinical-stage biotechnology company, Syntimmune, for $1.2 billion.

Year to date, Alexion’s stock has gained 13.4% against the industry’s 1.6% decline.

Terms of the Agreement

Alexion will make an upfront payment of $400 million for the acquisition along with potential milestone payments of $800 million.

The transaction is expected to close in the fourth quarter of 2018. Alexion intends to finance the acquisition through cash in hand.

Strategic Impact of the Acquisition

Syntimmune develops antibody therapeutics, targeting the neonatal Fc receptor (FcRn). The acquisition will add a mid-stage candidate, SYNT001 to Alexion’s pipeline. SYNT001 is a humanized monoclonal antibody that inhibits the interaction of FcRn with Immunoglobulin G (IgG) and IgG immune complexes. 

The candidate is currently being evaluated in phase Ib/IIa studies, in patients with warm autoimmune hemolytic anemia (WAIHA) and in patients with pemphigus vulgaris (PV) or pemphigus foliaceus (PF). The candidate has demonstrated proof of mechanism, showing rapid IgG reduction in early clinical studies.

Our Take

The acquisition will further diversify Alexion’s rare diseases pipeline. It should be a strategic fit with the company’s existing rare diseases franchises and will enable the company to provide treatments of diseases like warm autoimmune hemolytic anemia, where SYNT001 is the first, and currently the only anti-FcRn therapy in clinical development.

Alexion is looking to diversify its portfolio and reduce its dependence on its blockbuster drug, Soliris. Earlier in 2018, the company acquired Sweden-based Wilson Therapeutics for $855 million. The acquisition added a late-stage candidate, WTX101 to Alexion’s pipeline. The candidate is currently in phase III for the treatment of Wilson disease, a rare genetic disorder. Alexion announced a partnership with Complement Pharma to co-develop the preclinical C6 complement inhibitor, CP010, for neurodegenerative disorders.

The company recently announced that the phase III PREVENT study on Soliris was successful. The Prevention of Relapses and Evaluation of Eculizumab in NMOSD Treatment (PREVENT) trial was a multinational, double-blind, parallel-group time-to-event study that evaluated the efficacy and safety of Soliris compared to placebo for the treatment of patients with anti-aquaporin-4 (AQP4) auto antibody-positive neuromyelitis optica spectrum disorder (NMOSD).  A label expansion of the drug should boost sales.

Of late, quite a few biotech/drug companies have been looking to strengthen their portfolio/pipeline.  Taking a clue from Gilead Sciences’ (GILD - Free Report) acquisition of Kite Pharma, Celgene (CELG - Free Report) acquired Juno Therapeutics to gain traction in the promising CAR-T space.  Sanofi (SNY - Free Report) acquired Bioverativ Inc., which focuses on therapies for hemophilia and other rare blood disorders.

Zacks Rank

Alexion currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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