Alexion Pharmaceuticals (ALXN) - Get Alexion Pharmaceuticals, Inc. Report shares surged higher Monday after the rare disease specialist agreed to a $39 billion takeover by Britain's AstraZeneca (AZN) - Get Astrazeneca PLC Sponsored ADR Report.
AstraZeneca will pay around $175 per share for Alexion, through a combination of cash and shares, representing a near 45% premium to the group's Friday closing price and valuing the Boston-based group at $39 billion, or around 4 times Alexion's 2025 revenue target of $9.5 billion.
"Alexion's expertise in complement-driven diseases was a main driver for the acquisition as AstraZeneca (AZ) seeks to expand its presence in immunology," said BMO Capital Markets analyst Matthwe Luchini. "While Alexion mainly targets rare/ultra- rare disease, management believes there is potential for the combined R&D capabilities to expand Alexion's portfolio into more common diseases and also enhance Alexion's presence in rare disease via AstraZeneca's expertise in oligonucleotides and genomics/genetics."
Alexion shares were marked 30.6% higher in early trading Monday to change hands at $158.00 each. AstraZeneca's U.S.-listed shares were down 6.3% at $50.89 each while its main London listing fell 5% as investors factored-in the $39 billion price tag.
Alexion shareholders will own around 15% of AstraZeneca's outstanding shares when the deal closes in the third quarter of next year.
Alexion lifted its 2020 revenue guidance in October, and set a 2025 target of between $9 billion and $10 billion in annual sales, while noting its rare disease pipeline had grown to more than 20, with “the potential for 10 promising launches by 2023".
"Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases. This acquisition allows us to enhance our presence in immunology," said AstraZeneca CEO Pascal Soriot. "We look forward to welcoming our new colleagues at Alexion so that we can together build on our combined expertise in immunology and precision medicines to drive innovation that delivers life-changing medicines for more patients."
AstraZeneca shares have been held back in part by confusion surrounding its developing coronavirus vaccine and the rapid advances and approvals from rivals such as Pfizer (PFE) - Get Pfizer Inc. Report and Moderna (MRNA) - Get Moderna, Inc. Report.
A U.S. study of its AZD1222 vaccine, involving around 30,000 participants, is expected to conclude in January, the company said last week, after data from a previous trial in Britain and Brazil showed the average efficacy rate of the three dosage variants was around 70% -- and only 62% when used in two separate doses -- a much lower result than that achieved by Pfizer and Moderna's messenger-RNA based techniques.
Pfizer's vaccine was granted Emergency Use Authorization (EUA) by the U.S. Food & Drug Administration late Friday, and has already been rollout in the the United Kingdom following approval from health officials earlier this week.
The FDA will consider Moderna's EUA application on December 17.