Sector News

J&J, free from rival bidders, made Momenta wait on $6.5B deal

September 3, 2020
Life sciences

Johnson & Johnson’s $6.5 billion takeover of Momenta Pharmaceuticals came out of the blue last month. Yet, behind the scenes, the companies had been circling each other for more than 18 months, culminating in a drawn out due diligence process that drove Momenta to issue J&J an ultimatum.

The story of J&J’s acquisition of Momenta starts with a meeting between the companies at the J.P. Morgan Healthcare Conference in January 2019. Having expressed an interest in Momenta’s assets, J&J stayed in touch with the biotech and entered into a confidentiality agreement to facilitate talks in April. Two other companies entered into similar agreements later in 2019.

Discussions continued into 2020, when J&J floated the possibility of putting a proposal to Momenta ahead of the delivery of data from a phase 2 trial of the asset at the center of the talks, nipocalimab. J&J missed that deadline but moved quickly after seeing the top-line data, submitting a nonbinding buyout offer of $50 a share a week after Momenta publicly disclosed the results.

The data sent Momenta’s share price up 26% to close to $40 over the week leading up to J&J’s offer. Under normal circumstances, a biotech may issue stock to capitalize on the price rise and secure cash for the next stage of development, but with J&J in pursuit Momenta opted against such an offering. At the start of July, Momenta granted J&J access to a virtual data room to support its due diligence.

In the days either side of that event, Momenta learned that neither of the other two companies with which it formed confidentiality agreements in 2019 were willing to make a bid. Fearing it may jeopardize the J&J deal, Momenta opted against a broad outreach effort. Momenta chose to limit its outreach to just two companies in light of “the risk of leaks” and the speed at which J&J said it would be willing to proceed.

J&J ultimately moved rather slower than expected. By Aug. 4, Momenta’s transaction committee was telling management to get J&J to file a revised offer “as promptly as possible.” The next day, Momenta CEO Craig Wheeler gave J&J an ultimatum: Submit a revised offer within three days or we switch our focus to financing. By then, Momenta’s stock price had fallen well below the high it hit in the aftermath of the phase 2 data.

On Aug. 8, the last day covered by Wheeler’s ultimatum, J&J offered $52 a share. Negotiations later that day bumped the price up to $52.50. Having agreed that figure, Wheeler, who wanted to get the deal done quickly, asked to talk to J&J CEO Alex Gorsky to learn if the transaction had the support of him and his team. Six days later, Gorsky called Wheeler.

J&J’s board of directors was unable to meet to review the transaction for another four days after the call between Gorsky and Wheeler. Having received the board’s support and finalized certain details, J&J disclosed the deal on August 19, 49 days after it gained access to the data room.

Sanofi disclosed its $3.7 billion takeover of Principia Biopharma 12 days after being granted access to a virtual data room. Fifty-one days passed between Gilead gaining initial access to Forty Seven’s data room and publicly disclosing its $4.9 billion takeover deal. However, in that case the initial data room lacked documents Gilead needed to make a decision. After gaining access to the second data room, Gilead took just four days to seal the deal.

By: Nick Paul Taylor

Source: Fierce Biotech

comments closed

Related News

November 28, 2021

Founder-led biotech is making space for ideas—and diverse leaders—where it didn’t exist before

Life sciences

Decades ago, the founder-led biotech was rare and considered the tougher path to follow. Now there is a trend of founder-led biotechs that have risen in prominence in recent years, going from startup to well known with lightning speed. Scientists-turned C-suite occupants know their technology inside out. They’ve got credibility both at the bench working with their research teams and in the boardrooms selling their future products.

November 28, 2021

Pfizer to become $100B behemoth next year thanks to COVID-19 drug and vaccine: analyst

Life sciences

Pfizer’s revenue could reach $101.3 billion in 2022, with major contributions coming from the company’s BioNTech-partnered COVID vaccine and an antiviral therapeutic that has shown stellar clinical data, SVB Leerink analyst Geoffrey Porges projected in a Monday note to clients.

November 28, 2021

GlaxoSmithKline takes aim at sick pay access inequities with microgrant program and new campaign

Life sciences

In a survey commissioned by GlaxoSmithKline’s consumer health division of 2,000 working people in the U.S., almost 70% admitted to clocking in while sick, often because they couldn’t afford to lose a day’s pay. Black and Latina women were 10% more likely than white women to shun taking sick time for fear of fallout from their boss, according to the company’s 2021 Temperature Check Report.

Send this to a friend