MDCO Medicines Company

By Dana Cimilluca, Cara Lombardo and Jonathan D. Rockoff 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 25, 2019).

Novartis AG agreed to buy cholesterol-drugmaker Medicines Co. for nearly $10 billion, in a pricey bid to expand its reach in the lucrative market for heart treatments.

The pharmaceutical giant will pay $85 a share, the companies said Sunday, confirming an earlier report by The Wall Street Journal. That implies a fully diluted equity value of $9.7 billion, they said.

The acquisition would help Novartis, which has a market value of more than $200 billion, bulk up in a corner of the health-care market it is already targeting with drugs including its heart-failure treatment Entresto.

Novartis, based in Basel, Switzerland, had high hopes for Entresto, but early sales haven't met Wall Street expectations. Prescriptions have picked up, however, and sales jumped to $430 million in the third quarter.

The cholesterol drug under development by Medicines, based in Parsippany, N.J., is aimed at patients who aren't well-treated by older statin pills.

Medicines won't come cheaply. Its shares have risen as the company has reported positive data from testing of the drug, with the stock nearly quadrupling this year. Its shares closed at $68.55 Friday, meaning the deal values Medicines at 24% above a price that was already elevated by expectations of a deal.

The Medicines drug is based on relatively new technology that uses the body's molecular messengers, known as RNA, to turn off genes playing a role in a disease. The technology is known as RNA interference.

Pairing the Novartis and Medicines therapies would give sales representatives more products to peddle to heart doctors, potentially boosting sales of each.

Novartis Chief Executive Vas Narasimhan has been trying to steer the drugmaker into newer technologies through deals, such as its $8.7 billion acquisition of AveXis.

Novartis has faced scrutiny for pricing AveXis's Zolgensma gene therapy at $2.1 million, and for waiting to notify the U.S. Food and Drug Administration about the manipulation of some of the drug's test data until after the therapy's approval.

So far, sales of so-called PCSK9 drugs from Amgen Inc., Sanofi SA and Regeneron Inc. haven't met expectations, partly because health insurers have recoiled at their high prices.

Supporters say the Medicines entrant, known as inclisiran, will be different because it is based on a different kind of technology that interferes with the production of a key protein. And patients wouldn't have to take the drug as often as the others -- just twice a year.

Medicines executives have said they would price their cholesterol drug lower, though a deal would leave the decision in Novartis's hands.

Medicines has said it would file for the therapy's approval by year-end in the U.S. and in the first quarter of 2020 in Europe. Medicines licensed inclisiran from Alnylam Pharmaceuticals Inc.

World-wide sales of cholesterol drugs are growing nearly 11% a year and are projected to reach $17.7 billion in 2024, according to EvaluatePharma. High cholesterol is a leading cause of heart disease.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are financial advisers to Medicines and Paul, Weiss, Rifkind, Wharton & Garrison LLP is legal counsel. Bank of America Corp. is Novartis's financial adviser and Sullivan & Cromwell LLP is legal counsel.

Write to Dana Cimilluca at dana.cimilluca@wsj.com, Cara Lombardo at cara.lombardo@wsj.com and Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com

(END) Dow Jones Newswires

November 25, 2019 02:47 ET (07:47 GMT)

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