Business & Finance
Sobi announces completion of acquisition of US rights of Synagis from AstraZeneca and exercises authorisation to issue shares
24 January 2019 -

Swedish Orphan Biovitrum AB (Sobi) (STO:SOBI), an international biopharmaceutical company dedicated to rare diseases, announced on Thursday the completion of the acquisition from AstraZeneca of rights to Synagis (palivizumab) in the US, as well as rights to participate in 50% of the future earnings of the candidate drug MEDI8897 in the US.

Synagis is a medicine for the prevention of serious lower respiratory tract infections (LRTI) caused by respiratory syncytial virus (RSV) in high-risk infants and is the only approved preventative medicine for the condition.

MEDI8897 is a follow-on candidate to Synagis and a monoclonal antibody (mAb) being investigated for the prevention of LRTI caused by RSV in a broad infant population.

This transaction had an upfront consideration payable at closing of the acquisition corresponding to approximately USD1.5bn, consisting of cash and 24,193,092 newly issued Sobi common shares. Sobi will also pay USD20m in cash, per year, for the three years 2019-2021 as consideration for MEDI8897. Sobi may pay up to USD470m for Synagis sales-related milestones from 2026 onwards, plus, USD175m following submission of the Biologics License Application (BLA) to the US Food and Drug Administration (FDA) for MEDI8897.

This agreement also includes potential net payments of approximately USD110m on achievement of other MEDI8897 profit and development -related milestones. MEDI8897 associated payments, if payable, are expected from 2023 onwards.

Following completion of the acquisition, AstraZeneca will hold 8.1% of the total shares and votes in Sobi.

Sobi's board of directors, by way of set-off of claim, issued the 24,193,092 common shares to AstraZeneca by exercising the authorisation granted by the Annual General Meeting in May 2018. The subscription price (SEK187.0133) is based on the daily volume weighted average price paid for the Sobi common share on Nasdaq Stockholm during a period of five trading days immediately prior to entering into the agreement concerning the acquisition.

According to Sobi, this acquisition diversifies its revenue base in Specialty Care – Immunology. Also, Synagis, the only approved RSV prophylaxis for high-risk infants, complements Sobi's expertise in paediatrics and immunology. Synagis bolsters the importance of Sobi's Immunology franchise (consisting of Kineret, emapalumab and Synagis), and Immunology will constitute the majority share of total Specialty Care sales.

In addition, this acquisition accelerates the build-up of Sobi's US commercial platform. The acquisition of Synagis is expected to more than double both the revenue and size of Sobi's US organisation, enhancing the financial contribution of the US to Sobi's overall revenues to approximately one third.

Further, this acquisition enhances financial capacity and significant top line addition is expected to give Sobi substantial recurring earnings to further advance the US expansion and enable future strategic acquisitions over the mid-term, positioning the company well for its next phase of growth.

Sobi expects the product to generate an EBITA margin in excess of 60% and that the transaction will be accretive to earnings per share in 2019.

In March 2017, AstraZeneca and Sanofi Pasteur had announced an agreement to jointly develop and commercialise MEDI8897. Under the agreement, AstraZeneca is responsible for all development activity through initial approvals, as well as manufacturing of MEDI8897, while Sanofi Pasteur leads commercialisation activities. The two companies share all costs and profits equally.