A Global Switzerland Pharmaceutical, Novartis, has agreed to acquire Medicines Company (NASDAQ: MDCO) for a staggering $9.7 Billion. The Medicines Company, a biopharmaceutical company dedicated to the drug development of small interfering RNA (siRNA) for cardiovascular disease, has agreed to sell at a 47% premium on their share.
Why the Medicine Company?
The Medicines Company‘s development of a small interfering RNA in lowering the low-density lipoprotein (LDL) and LDL-C or bad cholesterol prove to be an attractive therapy for Novartis to have it under its portfolio of drugs. By having siRNA in lowering lipoprotein or bad cholesterol, this can prevent a high low-density lipoprotein from occurring. A high amount of LDL can result in the formations of plaque buildup or atherosclerosis. This can result in coronary artery disease where the arteries of a patient become too narrow and harden, a symptom that can lead to chest pain or a heart attack. Inclisiran is engineered to stop the production of proprotein convertase subtilisin/Kexin type 9 (PCSK9) in the liver.
Understanding the Market
Cardiovascular disease is the number one cause of death in the world, a Cardio Vascular disease that takes more than 17.9 million lives each year. In the US alone, it is estimated that more than 610,000 Americans succumb to their disease. The main drivers for the progression of the disease are high blood pressure, high cholesterol, and smoking. Medical conditions and lifestyles choice can accelerate the cardiovascular disease.
In a report by GBI research, the cardiovascular disease market is expected to grow from $129.2 billion in 2015 to $146.4 billion in 2020. This is not a surprise when you examine the cost that patients undergo when getting treated for their disease. From the ambulance to the hospital stay, it is costly to treat patients.
What Stage is Inclisiran
This is where inclisiran targets Cardiovascular Disease by preventing the development of high low-density LDL cholesterol. A potent drug used twice a year that lowers low-density LDL cholesterol of patients who may be suffering from complications in heart disease. The stage of development of the drug is still being tested for its safety and tolerability in phase III clinical trials. Novartis is expected to submit regulatory submission of its NDA to the FDA by the end of the year. A submission which may pose a threat to Amgen, Regeneron’s or Sanofi’s PCSK9 inhibitors sold to patients.
Novartis AG has agreed to purchase Medicine company at $85 dollar a share, a 45% premium to its previous share price of $58.65 a share on Nov 18, 2019. The board of The Medicines Company ultimately agreed on the all-cash transaction of $9.7 Billion because of the loss of a revenue driver from a previous product. This acquisition is expected to finalize in 2020.
“We are hoping to reimagine the treatment of the leading global cause of death. This could be a strong step forward in Novartis’ transformation into a focused medicines company,” Novartis CEO Vas Narasimhan.
The acquisition of The Medicine Company has further led to investors speculating whether Amarin and its blockbuster drug Vascepa will be at the mercy of a future buyout from Novartis or big pharma.