A Medical Device Daily
Major global pharma firm GlaxoSmithKline (GSK; London) said Friday it had executed a definitive agreement under which it would acquire Corixa (Seattle), a developer of products that regulate immunity.
The acquisition is structured as a cash-for-stock transaction, with Corixa shareholders entitled to receive $4.40 per common share, representing a total value of about $300 million. That represents a 48% premium to the closing price on April 28, the day before the deal was made public. Corixa’s stock closed Monday at $4.33, up $1.24, or just under 40%.
The transaction has been unanimously approved by Corixa’s board of directors and is subject to approval of its shareholders, as well as regulatory clearance and certain other conditions.
GSK already owns about 8% of the outstanding Corixa shares and additional holders of another 11% of the shares have agreed to vote their shares in favor of the transaction, which is expected to close in 3Q05.
Under the terms of the agreement, GlaxoSmithKline will acquire all scientific and business programs, activities, assets and all related rights of Corixa, including the company’s manufacturing facility in Hamilton, Montana, which produces Monophosphoryl Lipid A (MPL), a novel adjuvant contained in many of the vaccines in GSK’s pipeline.
Upon completion of the deal, GSK will no longer incur royalties and other costs under the existing agreements in place between the companies, nor will it incur royalties on future sales of its vaccines containing MPL. Under an agreement entered into by the companies last summer, GSK would have paid Corixa $150 million in manufacturing costs – plus royalties – over the next few years.
GlaxoSmithKline said it also will acquire all assets related to a candidate prophylactic tuberculosis vaccine and to a portfolio of candidate immunotherapeutic cancer vaccines, being developed by GSK Biologicals and which contain antigens discovered by Corixa pursuant to a 1998 multi-field vaccine discovery collaboration between the parties. As a result of the acquisition, GSK will no longer be required to pay royalties related to these antigens.
Jean Stephenne, president of GSK Biologicals (Rixensart, Belgium), said, “This is an important strategic deal for GSK’s vaccines division. MPL, in particular, is an important component in many of our most promising vaccines under development, including Cervarix, our candidate vaccine targeting infection with the human papilloma virus, a leading cause of cervical cancer.”
He said it also represents “the next step in progressing GSK’s promising tuberculosis vaccine approach and its cancer immunotherapeutics, as Corixa and GSK have together developed considerable expertise in these areas over the years.”
Phil Nadeau, analyst with SG Cowen & Co. (New York), said, “This might be an acquisition that plays to [the] theme that pharmaceutical firms have a lot of cash sitting around that they’re trying to put to work.”
In other dealmaking news:
• Medical Home Products (St. Petersburg, Florida), a provider of medical self-test kits and diabetics supplies, said it has issued a letter of intent to acquire an unidentified, established Texas-based Medicare durable medical equipment company.
Paul Mathis, president and CEO of Medical Home Products, said, “Consistent with our announced policy of aggressive growth we are seeking to acquire another Medicare equipment company. Our recent acquisition of Strictly Diabetics Inc. provides us with an experienced management team, established Medicare and Medicaid licenses and existing client base to allow our continued rapid expansion into the Medicare/Medicaid market.”
He said the acquisition would “significantly expand our existing client base and provide a major increase in our revenues. It also allows for the consolidation of our fulfillment and call-center operations, and along with our combined purchasing power, provides an increased return on investment for our shareholders.”
• DST Systems (Kansas City, Missouri) late last week confirmed the closing of the previously disclosed sale by Computer Sciences Corp. (El Segundo, California) of its Health Plan Solutions (HPS) business to a DST subsidiary.
HPS is an enterprise software developer, software application services provider and business process outsourcer for the U.S. commercial healthcare industry.
• Kline & Company (Little Falls, New Jersey) said it has completed the acquisition of the consulting business of Cellestian (Philadelphia), a management consulting and technology firm.
The two privately held consulting firms have collaborated on several major business strategy projects over the past two years. The companies said growing demand for the combined services of both firms encouraged them to formally link their two organizations.
Kline & Company is a management consulting and market research firm serving clients worldwide in the chemicals and materials, consumer products, life sciences and energy sectors.