Novartis announced the purchase of an additional 51.7% per cent stake in Speedel Holding Ltd. and plans to acquire the remaining shares in the Swiss biopharmaceutical company through a mandatory public tender offer.
Novartis has a long-standing collaboration with Speedel, whose R&D pipeline is a strong fit with the leading global position of Novartis in cardiovascular disease. The full acquisition of Speedel, excluding the 9.7 per cent stake held by Novartis before these transactions, is expected to cost CHF 907 million (or about USD 880 million).
"This step is a natural development in our collaboration, one that has created a successful breakthrough approach to helping patients with cardiovascular disease," said Joseph Jimenez, CEO of Novartis Pharma AG. "With the integration of Speedel into Novartis, we can accelerate development of Tekturna/Rasilez, particularly in combination with other medicines, and further advance Speedel's pipeline of novel compounds."
In 1998, Novartis provided funding for Speedel and rights to early-stage development of Tekturna/Rasilez (aliskiren). These rights were reacquired in 2002, and Novartis conducted out Phase III trials that led to US and European approvals in 2007 as the first new type of high blood pressure medicine - known as direct renin inhibitors - in more than a decade.
Speedel's pipeline targets hypertension and builds on the promise of direct renin inhibitors seen with Tekturna/Rasilez. Follow-on direct renin inhibitor projects include SPP635 (Phase II) as well as SPP1148 and SPP676 (Phase I). Other projects include SPP2745, a preclinical compound in the aldosterone synthase inhibitor class being investigated for potential benefits in treating patients with various cardiovascular diseases.
Renin is the key enzyme at the top of the Renin Angiotensin System (RAS), an important regulator of blood pressure. Direct renin inhibition is believed to provide additional benefits - including end-organ protection - beyond current therapies for patients suffering from cardiovascular diseases such as high blood pressure, chronic renal failure and congestive heart failure. High blood pressure and its effects are the world's No. 1 killer and affects about one billion people worldwide, according to the American Heart Association.
Known as Tekturna in the US and Rasilez in the rest of the world, this medicine will continue to benefit from the unrivaled position of Novartis in cardiovascular disease thanks to a portfolio that includes Diovan (valsartan) - the world's top-selling branded high blood pressure medicine - and one of the industry's most highly rated sales forces.
Various single-tablet therapies are being developed that combine Tekturna/Rasilez with other high blood pressure medicines. A combination with a diuretic was approved in the US, with a European submission awaiting approval. Another combination in development involves Diovan, the leader in the angiotensin receptor blocker (ARB) class.
The ASPIRE HIGHER program, which was initiated by Novartis, involves 14 clinical trials underway to explore the potential of direct renin inhibition in cardiovascular disease and end-organ protection. First results are expected to become available in 2011/2012.
Following the acquisition, Novartis will have greater flexibility and speed in the development of Tekturna/Rasilez and no longer make royalty and other manufacturing fee payments to Speedel.
On July 9, 2008, Novartis acquired an additional 51.7 per cent stake in Speedel through a series of off-exchange transactions with major Speedel shareholders for CHF 130 per share in cash. These included a 21.5 per cent stake from Dr. Alice Huxley, a co-founder of Speedel and the company's CEO. Novartis now holds 4.8 million shares of Speedel, or 61.4 per cent of the outstanding Speedel shares. As of June 30, 2008, Speedel had 7.8 million registered outstanding shares (or a total of 7.9 million shares on a fully diluted basis).
In accordance with Swiss law, Novartis will commence a mandatory tender offer to acquire the remaining shares of Speedel. All participating shareholders will be offered the same price of CHF 130 per share in cash. This represents an 80 per cent premium to the volume-weighted average price of Speedel's shares for the 60 trading days prior to this announcement, which was CHF 72.19 per share.
Total acquisition costs are estimated at CHF 907 million (or about USD 880 million). This comprises CHF 928 million to acquire the fully diluted share capital of Speedel (excluding 9.7 per cent already owned by Novartis) and costs to redeem Speedel's convertible bonds at a required 16 per cent premium to face value, less Speedel's estimated current cash. This transaction will be financed through the Group's financial resources. Speedel's activities are planned to be integrated into Novartis, with anticipated annual cost synergies of approximately USD 30 million achieved within two years after closing.