(Bloomberg) – Bayer AG beats $ 875 million deal for British women’s health biotech Kandy Therapeutics Ltd. and support their pharmaceutical division before patents on certain key products expire.
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The Bayer AG logo hangs on banners outside the Bayer CropScience AG research and development facility in Frankfurt, Germany, on Monday, July 13, 2020. Germany’s economy continues to recover after lowering coronavirus-related restrictions, but remains well below capacity, according to a government report.
The German pharmaceutical and chemical company agreed to pay $ 425 million in advance and potential milestone payments of $ 450 million until the launch of Kandy’s experimental treatment for menopausal symptoms.
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Kandy’s NT-814 drug is expected to begin a clinical trial in the final stages next year and could generate peak sales of 1 billion euros ($ 1.17 billion) worldwide, Bayer said in a statement on Tuesday. Bayer went up by 1.8% in Frankfurt.
With blockbuster blood thinner Xarelto and eye-care medicine Eylea losing patent protection in the next few years, Bayer’s pharmaceutical division has been looking for small-scale deals to increase revenue. The Leverkusen, Germany-based company has not unleashed a big fire for acquisitions after spending $ 63 billion in 2018 on agricultural giant Monsanto Co. – a deal that brought an army of legal headaches that Bayer is also trying to put behind.
Last August, Bayer’s pharma unit decided to pay as much as $ 600 million to buy the rest of cell therapy biotech BlueRock Therapeutics. Currently, Stefan Oelrich, head of pharma at Bayer, said the best value-creating deals in the industry in recent years have focused on start-up companies whose products are winning blockbusters.
While the Kandy deal is off to a ‘good start’, Bayer will need more such moves to offset the forthcoming loss of revenue of Xarelto and Eylea, which last year combined for 6.6 billion euros in sales, Michael Shah, an analyst with Bloomberg Intelligence, said in a note. Bayer’s late-stage product pipeline only has a peak sales potential of 3.8 billion euros, although the Kandy deal could increase that by 1 billion, Shah said.
Along with cardiology and oncology, Bayer has long been active in women’s health, marketing products in contraception and gynecological diseases. Last week, the company said it is in talks to resolve thousands of lawsuits claiming its Essure contraceptive device failed to prevent pregnancies or injured women. Bayer acquired that product when it launched medical device maker Conceptus Inc. in 2013. bought for $ 1.1 billion; Essure was launched from the market in 2018.
When Kandy’s medicine first hit the market, Bayer could make additional sales points for milestones in excess of $ 100 million, the company said. The deal is expected to close in September.
(Updates with analyst comments in sixth paragraph)
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