Regulatory documents show how 89bio’s board pushed Roche hard for a deal valued at $20 per share in upfront and milestone payments.
The success of Akero Therapeutics’ liver disease drug brought Roche to 89bio’s yard looking to make a deal.
While Roche and 89bio had been in communication for several years, it was the success of Akero’s efruxifermin in a Phase IIb trial for metabolic dysfunction-associated steatohepatitis (MASH) that kicked Roche’s interest in an acquisition into high gear. This detail, along with a timeline of how the purchase played out, was revealed in regulatory documents released October 1 regarding Roche’s $3.5 billion acquisition of 89bio.
There were as many as six companies closely watching 89bio’s progress over the years, with an eye to a potential transaction someday.
Efruxifermin reduced liver fibrosis by 24% compared to placebo in the mid-stage SYMMETRY trial, Akero reported in January. According to the regulatory documents, this development “heightened industry focus on the FGF21 class of therapeutics.” Roche then went to 89bio suggesting that the results had readthrough to the rest of the class of therapies—such as 89bio’s other FGF21 analog pegozafermin for MASH.
Over the months that followed, Roche conducted due diligence, including manufacturing site visits. At the same time, three other companies were seeking more information on 89bio’s programs, too.
In March, Roche suggested to 89bio a licensing deal for pegozafermin and offered to pause the ongoing diligence efforts to begin focusing on a manufacturing strategy for pegozafermin . The companies agreed and discussions on a manufacturing deal began.
In June, 89bio suggested via a financial advisor that a buyout would be preferred to a collaboration agreement. CEO Rohan Palekar reiterated this in person to Roche’s Head of M&A Marc Buser at an unnamed conference in Europe later in the month.
The suggestion worked, and in early July, Roche offered to buy the biotech for $13 per share in cash. At the time, 89bio’s share price was $10.22.
Palekar rejected the first offer and expressed his confidence in 89bio’s ability to go it alone on developing pegozafermin. Roche was still set to conduct some manufacturing site visits later that month, which Palekar hoped might spur a higher bid.
Meanwhile, advisors for 89bio reached out to five other potential companies to see if they might want to make a deal. None were interested.
Palekar then suggested to Roche that a per share price “in the twenties may be more amenable,” according to the documents.
Roche countered on July 30 with an offer of $14 per share plus a contingent value right of $2 per share after the first sale of pegozafermin for stage 4 MASH as long as that occurs by December 31, 2029. 89bio’s share price was sitting at $9.53 at this time.
Palekar’s suggested price was reiterated to Roche’s Buser, but advisors for Roche said there was “minimal further room on the upfront portion of the offer.”
But 89bio’s board wanted more. They voted to reject the proposal and push for a larger upfront payment and an even greater prospect in the CVR value. Again, the board suggested that the deal would need to have a value of about $20 per share altogether.
In late August, Roche revised the proposal to $14.50 per share upfront, followed by three CVR triggering regulatory and clinical milestones that totaled $5, bringing the deal just shy of the $20 goal. Roche indicated that the upfront was as high as they would go, but expressed openness to discussing the CVR package.
89bio’s board rejected the offer, still seeking more upfront and at least 50 cents more for each CVR.
Roche presented its “best and final” offer on August 29: $14.50 per share in cash upfront, plus CVRs of $2 upon the first sale of pegozafermin by March 31, 2030; $1.50 upon the achievement of $3 billion in annual global sales by December 31, 2033; and $2.50 at $4 billion in sales by December 31, 2035. At the time, 89bio was trading at $9.03. This brought the total consideration to $20.50 per share.
After much legal back and forth, the deal was announced on September 18. 89bio’s shares closed at $14.96 that day.
