LS on Amy buyout
Leerink Swann analyst Seamus Fernandez notes today... 15-May-12 05:20 pm
"The number of potential bidders is not surprising and fully validates the biopharma team's view (since the day of the Lilly divorce last November) that Amylin would be bought,” Leerink Swann analyst Seamus Fernandez noted.
BMS bid $22 a share for Amylin simply “sets a floor for any bid,” Fernandez wrote. “Our best guess is that the deal could get done reasonably in the mid-$30s for the right acquirer and a bidding war could push the number even higher should one ensue.”
Fernandez wrote that Amylin would be the most strategic acquisition for Sanofi, followed by Merck, because those companies best met four criteria: (1) an existing and leverageable presence in diabetes for several years, (2) a diabetes presence under threat, (3) a strong R&D commitment to metabolic disease and diabetes, and (4) the company views diabetes as a critical leverageable long-term fundamental growth opportunity.
Sanofi rose to the top, according to Fernandez, based on a growing leadership position in diabetes that faces direct competitive threat, namely the $5 billion Lantus franchise, the core growth asset in Sanofi's diabetes division. Within the injectable insulin segment, Sanofi’s position with Lantus is threatened by generic basal insulins from Lilly and other competitors, and novel basal insulins from Lilly, Novartis, and other competitors. Lilly is set to report Phase II data next month, and Novartis' degludec is expected to obtain global approvals in the second half of this year.
Sanofi is also seeking to expand its injectable diabetes franchise with its once-daily GLP-1 candidate, Lyxumia, licensed from Zealand Pharma. Sanofi's current strategy is to extend the Lantus franchise by developing a titratable single-pen injection formulation of Lantus+Lyxumia, but movement into Phase III has been delayed several times and currently is expected to advance in 2013. That would put Sanofi behind Novartis’ Ideglira fixed-dose combination of Victoza and Degludec, for which data is likely to be published in July or August.
Amylin would bring several key strategic positives and substantial operational synergies for Sanofi, Fernandez said. These include Byetta's recent label upgrade to include dosing in combination with Lantus, an immediate early potential synergy assuming no blocking options from Zealand; an immediate presence as first to market GLP-1; and immediate R&D synergies since Sanofi would be expected to shut down any internal plans for its own long-acting formulation of exendin-4.