If there's been a theme to 2023 so far, it's mid-size companies taking the plunge and making an offer on their biotech peers. The latest example is Sun Pharmaceutical, which has put down $576 million to acquire Concert Pharmaceuticals and its JAK inhibitor that could give Eli Lilly's approved alopecia treatment a run for its money.
The deal will see Sun Pharma acquire all outstanding shares of Concert for $8 apiece, representing a 33% premium to Concert’s 30-day weighted average share price. The transaction is expected to close in the first quarter of this year, with Concert shareholders also in line to receive up to an additional $3.50 per share should the biotech's lead candidate, dubbed deuruxolitinib, make it to market and hit certain sales milestones.
Deuruxolitinib is an oral JAK1/2 inhibitor designed to treat alopecia areata, an autoimmune disease that causes hair loss and has limited treatment options. Concert has completed a phase 3 evaluation of the efficacy and safety of the therapy in adults with moderate to severe alopecia and found 41.5% of people had at least 80% scalp hair coverage after taking a high dose. Concert has also been conducting two long-term extension studies of deuruxolitinib in North America and Europe, while assessing the candidate in other indications.
Sun Pharma’s immediate focus will be to submit a new drug application to the FDA for deuruxolitinib in the first half of this year, CEO for North America Abhay Gandhi said in a Jan. 19 release, adding that the company is “well positioned to successfully bring this product to market globally.”
The India-headquartered pharma clearly had money to burn on a suitable acquisition—as of the end of September, the company had $1.6 billion net cash on hand.
That heavy bank balance stood in contrast to Concert, which at the same point last year reported $29,000 in total revenue and a net loss of $90.6 million. The biotech blamed R&D expenses for making up $75.7 million of the shortfall. Still, the company had a not insignificant $148.9 million in cash and equivalents to fall back on if needed.
Though there are limited options available for treating alopecia, Sun Pharma will be up against Lilly’s and Incyte’s Olumiant, an oral JAK inhibitor for adults with severe alopecia that received FDA approval in June 2022—the agency’s first green light for a systematic treatment of the autoimmune disorder. Sun Pharma also has potential competition in Pfizer’s ritlecitinib, which is currently under FDA review for patients 12 years and up with alopecia.
The acquisition comes as the industry waits to see if M&A picks up this year following 2022’s frozen-over market. After relatively few biotech deals were announced at this year’s annual J.P. Morgan Healthcare Conference, several small-scale mergers have cropped up in the days following the event.