Ipsen to buy rare disease firm Clementia for up to $1.31bn

The French pharma has clinched a deal to buy Montreal-based Clementia at $25 per share in cash, which translates into an upfront payment of $1.04 billion.

Ipsen will also pay $6 in a contingent value right, if the FDA accepts a filing for Clementia’s lead drug to treat a rare bone disorder, worth an additional $263 million.

Clementia’s lead drug is palovarotene, an investigational retinoic acid receptor gamma selective agonist, for treatment of fibrodysplasia ossificans progressiva (FOP), multiple osteochondromas (MO) and other diseases.

A filing for FOP is expected in the second half of this year, paving the way for a potential launch in mid-2020.

Ipsen will pay the contingent value rights (CVR) of $6 per share if the FDA accepts a separate filing for palovarotene in the MO indication, a rare bone disease for which it is in phase 2 development.

Palovarotene is also in phase 1 development for dry eye disease.

Palovarotene has received orphan drug designation for FOP and MO from the Food and Drug Administration (FDA) and the European Medicines Agency (EMA), and Fast Track, Breakthrough Therapy and Rare Pediatric Disease designations for FOP from the FDA.

The acquisition will continue with the transformation of Ipsen under chief executive David Meek, who is aiming to increase the company’s presence in rare and ultra-rare diseases.

He is hoping to improve the value of the company’s pipeline with innovative drugs that could be first, or best, in their classes.

Palovarotene is an attractive target for Ipsen because it is close to market and has good chances of approval, and if it does get to market competition is limited.

The transaction will be fully financed by Ipsen’s existing cash and lines of credit and significantly increases the level of net debt.

It is expected to slightly reduce Ipsen’s core operating margin for 2019 and 2020, because of the costs of the ongoing clinical trials and preparation for the commercial launch of palovarotene.

Consequently, Ipsen is updating its 2019 financial objectives and expects unchanged sales growth of greater than 13.0% at current exchange rates.

Core operating margin will be around 30.0% of net sales which is down slightly from previous guidance of around 31.0% of net sales, excluding other potential investments in pipeline expansion initiatives.

The deal is subject to approval under Canada’s competition rules, and is expected to go ahead in Q2.

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