Monday, January 9, 2017

Japan's Takeda Ready For Fresh Acquisitions After $5.2 Billion Ariad Deal

Reuters
January 10, 2017

Japan's Takeda Pharmaceutical Co (4502.T) said it has the financial capacity for fresh acquisitions to bolster its drug portfolio after agreeing on Monday to acquire cancer drug maker Ariad Pharmaceuticals (ARIA.O) in a $5.20 billion deal.

The Ariad deal, at a 75 percent premium, is the latest example of pharmaceutical companies paying handsomely to snap up promising drugs owned by rivals in a bid to secure revenue growth. Pfizer Inc (PFE.N) agreed in August to pay $14 billion for Medivation Inc, the maker of the $2.2 billion-a-year cancer drug Xtandi.

Takeda's Chief Financial Officer James Kehoe said that the Japanese company's acquisition spree may continue.

"Should the right deal come along we have the capacity," Kehoe said during a conference call after Takeda announced the Ariad purchase. The company was in a position to limit its debt burden and retain a strong credit rating, he said.

At the end of its last business year that ended on March 31, Takeda had 438 billion yen ($3.79 billion) in cash and cash equivalents.

Takeda's Chief Executive Officer Christophe Weber said on the same call that while there were not many opportunities to buy cancer drugs and central nervous system drugs, such as Alzheimer remedies and bipolar treatments, the company, nevertheless, would make acquisitions "that make sense."

Takeda's move comes as it readies to face imminent generic competition for its top-selling blood cancer drug Velcade, with other key products slated to go off patent later from 2020.

Weber said the potential returns from Ariad's lung cancer treatment, Brigatinib, and its leukemia drug, Iclusig, along with other formulas in its pipeline justified the high premium.

Takeda predicts annual sales from Brigatinib, which the U.S. Food and Drug Administration is expected to decide on by April, could exceed $1 billion.

"It has the potential to be the best in class," Weber said.


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