By Natallie Rocha | [email protected] | The San Diego Union-Tribune
Halozyme Therapeutics, A San Diego-based biopharmaceutical company, has made a $2.1 billion bid to buy German drugmaker Evotec.
The proposed deal is aimed at expanding Halozyme's capabilities to develop drug technology and its partnerships with large pharmaceutical companies. The Carmel Valley company, founded in 1998, expects to increase revenue through the next decade and attract new customers through Evotec.
"With increased scale, a deep pipeline, and a diversified offering, we would be a highly attractive strategic partner to the biopharma industry," said Helen Torley, CEO of Halozyme, in the announcement. "This in turn would provide a remarkable opportunity to accelerate the discovery and development of medicines that will improve patients' outcomes."
Halozyme develops technology at the biological level to improve how drugs are delivered to patients' bodies. Its lead commercial product, Enhanze, is an enzyme that allows medicine for treating cancer or autoimmune diseases to be delivered quicker and more conveniently.
For instance, it can take a drug that previously was administered via an hourlong intravenous infusion in a hospital setting and produce a shot that is delivered in minutes at a doctor's office.
Halozyme's business is centered on licensing its technology to other pharmaceutical companies. It has licensing deals with a slew of big pharmaceutical companies such as Roche, Bristol-Myers Squibb and Janssen.
Halozyme delivered a positive performance during the most recent quarter, with about $290 million in total revenue, up about 34% from the same period last year. The company also recorded $137 million in net income during the quarter, a 67% year-over-year increase, according to SEC filings.
Torley explained in a Monday interview with Bloomberg TV why her company wants to buy Evotec, which focuses on drug discovery and manufacturing.
"Our business is a licensing business ... at the core that's what Evotec does as well," she said. "It does it with drug discovery so they have a mission to invent more effective medicines, but they'll do that with partners ... And they've also got manufacturing where they want to be the manufacturer using a new process called continuous manufacturing that'll deliver higher quality at lower cost, again for those same partners."
Torley added that the company has been eyeing an acquisition for a couple of years and took that time to identify the best fit for its growth strategy.
"[Evotec] is just a terrific fit and we're going to have the opportunity to grow by cross selling platforms to all of the current partners - Evotec has over 500 partners - and we have about 10," Torley said during the Bloomberg interview. "But also by having the best and most diverse platform now that goes end to end, we'll attract new partners. So that's where the growth will come - both from within expansion and new partners too."
Halozyme shares took a hit Friday as investors reacted cautiously to the news raising concerns that the large transaction would dilute their stock value. Halozyme's stock closed at $58.61 on Nov. 13, before the deal was announced, and closed Thursday at $45.70.
The company clarified Monday that this would be an all-cash deal. Halozyme is offering to buy Evotec for a premium of about $11.52 per share, through cash on hand and new debt.
The company has not stated a proposed closing date of the acquisition.