Alexion Pharmaceuticals Inc. (ALXN:US), the drugmaker whose blood-disease treatment is among the world’s most expensive medicines, engaged Goldman Sachs Group Inc. as an adviser as it prepares for a possible takeover offer from Roche Holding AG (ROG), said people with knowledge of the matter.
Swiss drugmaker Roche informally approached Cheshire, Connecticut-based Alexion last week about a deal, an advance that was rebuffed, said one of the people, who asked not to be named because the overture was private. Alexion wants Goldman Sachs to help negotiate if Roche offers a price high enough to interest management, or to help defend against a possible hostile bid, another person said.
Alexion rose (ALXN:US)6.4 percent to $117.08 yesterday in New York, giving the company a market value of almost $23 billion. The company has traditionally been close to New York-based Goldman Sachs, which advised Alexion on its recent acquisitions of Enobia Pharma Corp. and Taligen Therapeutics Inc., according to data compiled by Bloomberg. Roche is interested in Alexion’s blood-disease medication Soliris, which can cost patients as much as $400,000 a year, said one of the people.
Roche also is interested in treatments Alexion has in its pipeline, according to that person. Alexion’s products in development include asfotase alfa, used to treat a rare and sometimes fatal bone disease. Unlike some health-care rivals, Roche is unafraid of the high price of some Alexion treatments, said this person.
Roche fell 1.5 percent to close at 228 Swiss francs in Zurich, the biggest drop in two weeks.
Michael Duvally, a spokesman for Goldman Sachs, declined to comment, while Irving Adler, a spokesman for Alexion, called the approach from Roche “a rumor” and declined to comment beyond that. Daniel Grotzky, a spokesman for Basel, Switzerland-based Roche, said the company doesn’t comment on market rumors.
Soliris, which generated about $1.1 billion in sales (ALXN:US) last year, is approved to treat two rare blood diseases affecting fewer than 20,000 people. As an orphan drug, designed for a small number of patients with few treatment options, Soliris receives enhanced marketing exclusivity and is usually covered by insurers, making it valuable to potential acquirers.
Roche was seeking billions of dollars in financing for a potential takeover of Alexion, people familiar with the matter said this month, and had been in contact with Alexion on and off for months. It’s unclear how interested Alexion is in selling the company, the people said.
The Swiss drugmaker has faced difficulty in bringing projects outside its cancer business to fruition. The company said July 10 it suspended testing of its most advanced experimental diabetes drug over safety concerns. Roche also halted development of its cholesterol drug dalcetrapib last year and abandoned the diabetes drug taspoglutide in 2011.
A purchase by Roche of Alexion would make sense “given cost synergies, tax advantages (given where they are domiciled), Alexion’s solid revenue trajectory and vast pipeline,” Salveen Richter, an analyst with Canaccord Financial Inc., said in a note to clients.
In a recent visit with Alexion, Richter said the company “noted that there is substantial value in their pipeline that would have to be adequately reflected in any transaction.”
Alexion was founded in 1992 by Chief Executive Officer Leonard Bell and Joseph A. Madri, a professor at Yale University School of Medicine and a current member of the board. The company won U.S. Food and Drug Administration approval for Soliris’s first use, in paroxysmal nocturnal hemoglobinuria, or PNH, a disorder of the red blood cells, in 2007.
PNH affects fewer than 10,000 patients in the U.S., according to the Mayo Clinic. Without treatment, as many as 35 percent of patients die within five years of diagnosis. In 2011, the drug was cleared to fight atypical hemolytic uremic syndrome, or aHUS, in which clots form in small blood vessels, leading to organ damage.
Alexion is reluctant to sell because it’s attempting to expand Soliris’s uses and develop other drugs to boost revenue, and wants to capitalize on those gains, said one of the people.
Roche made a $6.7 billion hostile offer for Illumina Inc. (ILMN:US) last year to gain gene-sequencing equipment. The company, helmed by CEO Severin Schwan, abandoned the bid after Illumina shareholders held out for a higher price.
A takeover of Alexion would be Roche’s largest since the company bought the portion of Genentech Inc. it didn’t already own for $46.8 billion in 2009, the biggest biotechnology deal on record, according to data compiled by Bloomberg.
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