Case study: Novartis to acquire The Medicines Company for $9.7 billion, get hold of inclisiran, a cholesterol drug

Novartis, a one of the leading global pharmaceutical company, to acquire The Medicines Company for $9.7 billion. 

Strategic reasoning of the deal:

The Medicine Company has the brand, inclisiran, has Phase 3 testing and is being prepared for an FDA submission. With acqusition of The Medicine Company, Novartis will get hold of inclisiran, a cholesterol drug.

With the acquisition, Swiss pharma giant Novartis aims to compete with two other next-generation cholesterol drugs now being marketed by Amgen and Sanofi —but with a dosing advantage over its rivals.

Financials of the deal:

The purchase price amounts to $85 per share, a nearly 45 percent premium to the $58.65 closing stock price of Parisppany, NJ-based MedCo on Friday. Both companies’ boards of directors have approved the deal.

About Inclisiran – Next Gen Cholesterol Drug

• Inclisiran is part of a new class of medicines based on RNA interference (RNAi), a “gene-silencing” approach intended to stop a gene from producing a disease-causing protein.
• The drug was developed to stop PCSK9, a liver protein that, in high amounts, hinders the body’s ability to clear low-density lipoprotein cholesterol (LDL-C or “bad” cholesterol) from the blood.
• By preventing PCSK9 production, MedCo says its drug boosts the liver’s ability to remove LDL-C from the blood.

Initial Development of Inclisiran:

• MedCo acquired the rights to inclisiran from Alnylam Pharmaceuticals, which has joined in the clinical development of the compound.
• Detailed Phase 3 results were presented last week at the American Heart Association’s annual meeting in Philadelphia.
• The company reported that its drug reduced LDL cholesterol by up to 58 percent.
• Cholesterol reduction of up to 56 percent was sustained when the twice-yearly drug was given along with statins and/or ezetimibe, two types of cholesterol-lowering drugs that are currently on the market.
• No liver or kidney problems were reported in connection with the drug. Patients who completed the Phase 3 tests are being enrolled in a long-term study that will evaluate inclisiran for three years.

Market Competition of inclisiran:

Amgen and Sanofi, in a partnership with Regeneron Pharmaceuticals, have commercialized their respective PCSK9 inhibitors, evolocumab (Repatha) and alirocumab (Praluent).

These medicines are not RNAi drugs. Rather, they work by binding to excess PCSK9 so it can be cleared from the body. But the Amgen and Sanofi drugs, given every two to four weeks as subcutaneous injections, initially struggled to gain market traction as insurers balked at their cost. In response, Sanofi and Regeneron, and Amgen, have slashed prices.

MedCo’s drug was developed to be given as an injection twice a year, which the company believes offers advantages in dosing as well as reimbursement.

CEO Mark Timney told Xconomy in September that patients at risk of a heart attack or stroke may be already be seeing a doctor every six months, which could make insurers more willing to pay for a treatment timed to coincide with such visits.

Regulatory Progress of inclisiran:

MedCo plans to file for regulatory review of inclisiran in the US by the end of 2019, and in Europe in the first quarter of 2020.