Sosei, a biopharmaceutical company of Japanese origin that develops and commercializes innovative drugs globally, announced that at the meeting of the board of directors held, it resolved to acquire existing shares and underwrite a third party allocation of new shares of Jitsubo Co., Ltd. (Jitsubo). Upon completion of these transactions, Jitsubo will become a consolidated subsidiary of the Group.
Reasons for the acquisition: The Group has successfully secured a steady revenue stream from milestones and royalty payments from COPD products licensed to Novartis (Seebri Breezhaler and Ultibro Breezhaler). However, in order to further enhance its corporate value, the Group has been looking for new pipeline candidates that could augment the revenue inflow from the two marketed Novartis products.
As a result, the Group has identified and resolved to acquire Jitsubo, a company with a cutting-edge peptide technology. Together with APNT (the nanoparticle technology of the Group’s subsidiary, Activus Pharma), Jitsubo’s technology is expected to play an important role in achieving the mid-long term strategic goals of the Group.
Jitsubo was established in April 2005 by Professor Kazuhiro Chiba of the United Graduate School of Agricultural Science, Tokyo University of Agriculture and Technology, with the aim of bringing a commercial focus to his scientific findings. The company is focused on development of peptide generic products and identification of new drug candidates based on the novel peptide synthesis technology, Molecular Hiving, and the molecule modification technology, Peptune. Together, these technologies enable efficient synthesis and isolation of peptide analogue compounds.
Expected benefits of the acquisition:
Acquiring a new platform technology will enable the Group to enter the peptide market – Considerable expectation is placed on peptides as the next generation of drugs, as their smaller molecular weight compared to proteins facilitates organic synthesis. Additionally, due to higher mass and molecular diversity of peptides compared with small molecular weight compounds, it is anticipated that they may enable access to therapeutic targets that are difficult to control with small molecule treatments. There are currently over 50 marketed peptide products, and the peptide market is expected to reach $23 billion by 2020. Through the acquisition of Jitsubo the Group acquires a state-of-the-art technology that has a potential to become a generator of future revenue and growth.
Replenishing the existing pipeline with new peptide products will further enhance corporate value – The two Jitsubo peptide generic products, as well as other drug candidates that are expected to follow in the future, will help replenish the Group’s existing pipeline and further enhance corporate value.
Based on the Investment agreement signed with Jitsubo, the Group will underwrite a third-party allocation for 68,871 new “Class D” shares that are to be issued by Jitsubo on 26 December. In addition, The Group will acquire 69,490 of the issued outstanding shares from the existing shareholders. As a result, the Group will own 52.4% of Jitsubo issued shares, making Jitsubo a consolidated subsidiary.
As 1 outstanding share holds 1 voting right, and 1 “Class D” share holds 3 voting rights, Sosei will hold 276, 103 voting rights of the total of 401,632. This equals to 68.7% of voting rights holding ratio.
The Group has reached agreement with 8 individual shareholders whose names and addresses were being withheld, as per their request for privacy. There are no conflicts of interest in terms of capital, personnel and business transactions that require disclosure.
The potential impact of the acquisition on future earnings is difficult to estimate at present. The Group will inform investors of any important matter arising from the transaction, in a timely and appropriate manner.
Sosei is a biopharmaceutical company of Japanese origin that develops and commercializes innovative drugs globally. Its business model is primarily based upon identifying new uses for established drugs and exploiting its unique position within Japanese, European and North American pharmaceutical markets by acquiring compounds from, and bringing compounds into, Japan.