Europe’s Biggest Biotech, Actelion, Offering $2.5 Billion to Buy U.S.-Based ZS Pharma

Europe’s Biggest Biotech, Actelion, Offering $2.5 Billion to Buy U.S.-based ZS Pharma
September 11, 2015
By Mark Terry, Breaking News Staff

Switzerland-based Actelion Ltd. announced yesterday that it was in possible acquisition talks with San Mageo, Calif.-based ZS Pharma . Reportedly Actelion made a preliminary offer in August for approximately $2.5 billion.

Actelion is the biggest biotech company in Europe, and has been the center of speculation that it could be an acquisition target for Shire or Bayer , as well as other big companies. Actelion’s biggest drug is Tracleer, for the treatment of pulmonary arterial hypertension (PAH), a rare disease that causes high blood pressure. The drug made up about 75 percent of Actelion’s revenue in 2014, but the drug’s U.S. patent expires in November 2015.

Competitors in this area include Bayer, GlaxoSmithKline and Gilead Sciences, Inc. . Actelion has a follow-up PAH drug, Opsumit, which is growing in the market, and another PAH drug, Uptravi, is being considered for approval by the U.S. Food and Drug Administration (FDA) and regulators in Europe.

ZS Pharma was founded in 2008 and utilizes proprietary ion-trap technology to develop drugs that mimic or exploit the body’s own ion channels. The company’s ZS-9 drug candidate for the treatment of hyperkalemia is received its acceptance of its New Drug Application (NDA) with the FDA. The decision date for the drug is May 26, 2016. Hyperkalemia involves higher than normal potassium levels that can lead to heart attacks, arrhythmia and sudden death.

ZS Pharma does not yet produce revenue. The company went public in June 2014 after a $112 million initial public offering. It then raised another $175 million in a share sale in March of this year.

Investors in ZS Pharma clearly liked the idea of a sale, with spiking from $49.50 on Aug. 21 to a current price of $76.55. Over the last year the stock has been on a reasonably steady increase, although there was some volatility recently. Shares traded on Nov. 18, 2014 for $36.31, rose to $50.30 on Mar. 18, 2015, dropped to $39.01 on May 1, then to $60.86 on May 27.

, for the most part, has been on a steady increase until recently. Shares traded for $81.55 on Oct. 16, 2014, rose to $113.50 on Mar. 23, 2015, and to $140 on July 17. Shares dropped to $113.85 on Aug. 24, but started a slow rise. Shares are currently trading for $119.50.

According to The Street, ZS Pharma has a market value of about $2 billion. Actelion is valued at about $15.5 billion. Actelion is believed to be considering several acquisition targets in addition to ZS Pharma.

Analysts aren’t completely positive on the deal. “It’s not exactly a product that fits perfectly well with what Actelion is currently doing,” Eric Le Berrigaud, an analyst at Bryan Garnier in Paris told SwissInfo. “There may also be questions about the final price because the price has already gone up sharply.” He does note, however, that the acquisition would give Actelion a chance to diversify without having to increase its sales force.

“We do not see in ZS-9 an immediate synergistic effect for Actelion’s portfolio but more an opportunistic approach from the company for a specialty-care product that is approaching the market,” Peter Welford, an analyst at Jefferies in London, wrote in a research note today. “The target market is not crowded and is unlikely to require massive commercial investments to make ZS-9 a drug.”

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