This Bay Area Biotech is Being Wooed by Drug Giant Novo Nordisk A/S

This Bay Area Biotech is Being Wooed by Drug Giant Novo Nordisk A/S March 9, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Danish company Novo Nordisk has reportedly approached South San Francisco, Calif.-based Global Blood Therapeutics about an acquisition.

Global Blood Therapeutics is focused on discovering, developing and commercializing drugs for blood-based disorders. Its lead product, GBT440, is in several different trials for sickle cell disease (SCD). On January 18, the company announced the enrollment of its first patient in the HOPE Phase III trial of GBT440 in sickle cell disease. The U.S. Food and Drug Administration (FDA) has granted GBT440 fast track and orphan drug designations. The European Commission (EC) has given it orphan medicinal product designation.

GBT also has GBT 440-001 in a Phase I/II trial in adolescents with sickle cell disease. It is also being evaluated for chronic hypoxemic pulmonary disorders, which include idiopathic pulmonary fibrosis and acute respiratory distress syndrome.

In September 2016, Novo Nordisk announced that it was planning to lay off about 1,000 employees. A leader in insulin development and sales for the diabetes market, about half of the company’s revenue comes out of the U.S., which has about 30 million diabetes patients. However, prices are being cut by insurers and pharmacy benefit managers (PBMs).

Brian Orelli, writing for The Motley Fool, notes that GBT440 “would fit nicely with Novo Nordisk’s hemophilia drugs.” The other diseases, not so much. “That might be a little outside of Novo Nordisk’s wheelhouse, but the company could always partner out that indication if it didn’t want to build out a sales force to target pulmonologists.”

Neither company is commenting, so it’s possible that no deal will come of it. There’s also the possibility that GBT isn’t interested in being acquired. Novo Nordisk isn’t known for making acquisitions, but with the diabetes market sagging, the company is being pressured to find new growth pathways.

Reuters noted that, “Outside diabetes, Novo Nordisk already has a significant blood products business focused on hemophilia. However, its mainstay NovoSeven hemophilia drug could face challenges with Roche ’s new product ACE910 having the potential to erode sales.”

Analysts have viewed GBT as a potential takeout target for a while, although they were surprised by Novo Nordisk’s interest. “We and a lot of people saw it as a takeout target either later this year or in 2018,” Mark Breidenbach, an analyst with Roth Capital Partners, told TheStreet.

In November 2016, Breidenbach started covering GBT, at which point he wrote in a note to investors, “With promising early clinical data in hand, we believe Global Blood could be an attractive takeout target for any large biopharmaceutical company looking to expand its hematology portfolio.”

Pfizer appeared to be higher up on Breidenbach’s list of potential suitors than Novo Nordisk. Pfizer, Breidenbach told TheStreet, “already has a small molecule program specifically in sickle cell disease (rivipansel) but that’s for treatment of vaso-occlusive crises in an acute setting. GBT440 would be used more as preventative medicine and could address all the other clinical consequences of sickle cell disease, including VOCs.”

Global Blood Therapeutics is currently trading at $34.25. It’s taken a large jump since the beginning of the year. Shares traded on December 29, 2016 for $13.90, rose to $16.10 on February 3, 2017, climbed to $28.80 on March 8, and rocketed again at the buyout rumors.

Orelli, however, writes, “While a deal between Global Blood and Novo Nordisk makes sense, there are no guarantees that it’ll get done. Investors who buy at this inflated price should buy based on Global Blood’s value as a stand-alone company, and treat any additional premium as a bonus if the biotech is purchased.”

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