Acquisition Overview
Sanofi, a leading French pharmaceutical company, has announced its agreement to acquire Provention Bio, a U.S.-based biopharmaceutical company that focuses on preventing and intercepting immune-mediated diseases, including type 1 diabetes (T1D). Sanofi will purchase Provention Bio for $25.00 per share in cash, which represents an equity value of approximately $2.9 billion.
Sanofi's acquisition of Provention Bio adds a first-in-class therapy in type 1 diabetes to its core asset portfolio in General Medicines, further reinforcing its strategic shift towards products with a differentiated profile. The innovative therapy, TZIELD, was approved in the U.S. last year as the first and only therapy that delays the onset of Stage 3 type 1 diabetes (T1D) in adults and paediatric patients aged 8 years and older with Stage 2 T1D.
Sanofi's acquisition of Provention Bio is a complementary strategic transaction as Sanofi looks to increase its offerings in immune-mediated diseases, specifically diabetes. A major goal of Sanofi is to maximise TZIELD's potential as an effective treatment for Type-1 diabetes globally and in the United States.
Therefore, Sanofi as a leading global pharmaceutical company with a strong track record of developing and commercialising innovative therapies for patients with a range of medical conditions. The acquisition of Provention Bio further strengthens Sanofi's position in the diabetes market and the company's focus on advancing therapies for patients with immune-mediated diseases.
Deal Structure
According to the merger agreement, Sanofi will start a cash offer to acquire all outstanding shares of Provention Bio, Inc. for $25.00 per share in cash, reflecting a total equity value of approximately $2.9 billion.
However, the tender offer is subject to a few customary closing conditions. They include the number of shares of Provention Bio common stock that is already owned by Sanofi or their affiliates represents at minimum a majority of the outstanding shares of Provention Bio commons stock, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary conditions.
Once successfully completed, a wholly owned subsidiary of Sanofi will merge with and into Provention Bio, and all of the outstanding Provention Bio shares that are not tendered in the tender offer will be converted into the right to receive the same $25.00 per share in cash offered to Provention Bio shareholders in the tender offer.
They plan to finance the transaction with available cash resources with the expected completion date of the acquisition to be in the second quarter of 2023. For Sanofi, PJT Partners is acting as the exclusive financial advisor and Weil, Gotshal & Manges are acting as its legal counsel. Whereas, Provention Bio, BofA Securities and Centerview
Partners are acting as financial advisors to Provention Bio and Ropes & Gray is acting as its legal counsel.
Provention Bio. Overview
Provention Bio is a public biopharmaceutical company based in the United States that is focused on developing and commercialising new and innovative therapies for the interception and prevention of immune-mediated diseases. The company was founded in 2016 and is headquartered in New Jersey.
Provention Bio has been involved in various collaborations with leading academic institutions and industry partners to advance its pipeline of therapeutic candidates. The company has partnered with Janssen Biotech, a subsidiary of Johnson & Johnson, to develop and commercialise treatments for type 1 diabetes. The company also has a collaboration with the University of Oslo to develop a vaccine for celiac disease.
They have also developed proprietary technologies and platforms to enable the identification and development of new therapies for immune-mediated diseases.
Provention Bio went public in 2018 and is listed on the NASDAQ stock exchange under the ticker symbol PRVB.
Founded: 2016
Number of Employees: 80 (2022)
EV: 282,971
LTM Revenue: $1.4mn
LTM EBITDA: -$115,000
Market Cap: $2.09bn
Industry Insight
The pharmaceutical industry is a large and interdependent industry that essentially covers a broad range of activities related to the development, manufacture, and distribution of drugs and medications. It is a vital industry that plays a large role in our everyday lives, especially after people realised its importance during the Covid-19 pandemic.
Research and development involve the discovery of new drugs and the testing of their safety and efficacy. Manufacturing involves the production of drugs at scale, while marketing and distribution involve the promotion and sales of drugs to healthcare providers and patients. Regulations-wise, they usually involve navigating the complex regulatory landscape to ensure that drugs are safe and effective and comply with applicable laws and regulations.It is important to note that it is heavily regulated, with stringent requirements for drug development, approval, and marketing.
Some of the current issues they face are supply chain disruptions, challenges facing healthcare professionals and wages, and high barriers to entry. However, The industry is also subject to intense competition, as companies strive to develop new and innovative drugs that can capture market share and generate significant revenue. Yet, the pharmaceutical industry is a significant contributor to the global economy, with annual revenues in the hundreds of billions of dollars, while also providing jobs for scientists, researchers, manufacturing technicians, and marketing professionals.
Strategic Rationale
Provention Bio has a strong pipeline of novel therapies for immune-mediated diseases, including its lead product candidate, TZIELD, which is currently in phase 3 clinical trials for the treatment of type 1 diabetes. Sanofi has a portfolio of products that includes treatments for a range of diseases, including diabetes. The acquisition of Provention Bio allows Sanofi to supplement its existing portfolio with Provention Bio's innovative technologies and expertise in immune-mediated diseases, potentially expanding its product offerings.
Sanofi has identified immunology and inflammation as one of its key product and research areas, the acquisition of Provention Bio helps to strengthen its position in this field. Provention Bio has a strong pipeline of product candidates that target different immune-mediated diseases, and Sanofi can leverage their expertise to further develop and expand its immunology portfolio. Therefore, the acquisition of Provention Bio can help Sanofi to expand its reach into new markets.
Provention Bio is also focused on developing new therapies for immune-mediated diseases, a sector that is rapidly growing and attracting significant interest from investors in the industry. By acquiring Provention Bio, Sanofi can capitalise on this and position itself as a leader in the industry.
Thus, the strategic rationale behind the acquisition of Provention Bio by Sanofi is to strengthen Sanofi's position in the pharmaceutical industry by expanding its product offerings, expertise and global reach. Through their merger and acquisition, they can work together to develop new and innovative existing therapies for immune-mediated diseases; perhaps even bringing new once-impossible treatments to patients.
Long-Term Prospects
The acquisition of Provention Bio by Sanofi is significant for both companies and the field of pharmacology as a whole.
Provention Bio is a clinical-stage biopharmaceutical company that focuses on developing novel therapies to prevent and treat immune-mediated diseases. Sanofi, on the other hand, is a global pharmaceutical company that focuses on developing and commercialising medicines for a range of diseases. The acquisition is important for Sanofi because it provides the company with access to Provention Bio's innovative technologies and expertise in immune-mediated diseases.
This can help Sanofi to strengthen its position in the field and expand its portfolio of products. Additionally, the acquisition allows Sanofi to gain control of Provention Bio's lead product candidate, teplizumab, which is currently in phase 3 clinical trials for the treatment of type 1 diabetes. For Provention Bio, the acquisition provides access to Sanofi's extensive resources, including its global reach and expertise in clinical development and commercialization, which in turn can help Provention Bio to accelerate bringing its services and products to the market.
Overall, the acquisition of Provention Bio by Sanofi is an important development for both companies and has the potential to lead to significant advancements in the field of pharmaceuticals.
Written by Zaineh Abed Alhameed (King’s College London)
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