· Will enhance UCB’s leadership potential in myasthenia gravis by adding zilucoplan, a peptide inhibitor of complement component 5 (C5) currently in phase 3, to the UCB pipeline alongside to UCB’s rozanolixizumab, an FcRn targeting antibody also in phase 3
· Will enrich UCB’s pipeline; zilucoplan is a novel, potentially best-in-class investigational molecule also being evaluated in other complement-mediated diseases including amyotrophic lateral sclerosis (ALS) and immune-mediated necrotizing myopathy (IMNM). UCB will develop and, if approved, launch zilucoplan worldwide, accelerating and diversifying company growth
· Will accelerate UCB’s long-term innovation capabilities through the addition of Ra Pharmaceuticals ExtremeDiversity™ technology platform
· Plan to maintain productive and innovative Ra Pharma unit in Cambridge, MA, to complement UCB’s research hubs
· The acquisition will enable accelerated top and bottom line growth from 2024 onwards
· Total transaction value of approximately US$ 2.1 billion / € 2.0 billion (net of Ra Pharma cash) based on US$ 48 in cash per Ra Pharmaceuticals share (approximately US$ 2.5bn / € 2.2bn)
· This acquisition will not impact UCB’s 2019 financial guidance. It would be dilutive to UCB’s mid-term earnings level and hence move the mid-term target of UCB reaching a rEBITDA ratio (to revenue) of 31% to 2022 from 2021 as previously guided.
BRUSSELS, Belgium and CAMBRIDGE, MA, USA I October 10, 2019 I UCB and Ra Pharmaceuticals Inc. (NASDAQ: RARX, Ra Pharma) announced today their entry into a merger agreement pursuant for which UCB will acquire Ra Pharma. Under the terms of the agreement, Ra Pharma shareholders will receive US$ 48 in cash for each Ra Pharma share at closing. The Boards of Directors of both companies have unanimously approved the transaction, which remains subject to approval by Ra Pharma shareholders and to obtaining antitrust clearance and other customary closing conditions.
Ra Pharma is a clinical-stage biopharmaceutical company leveraging a proprietary peptide chemistry platform to develop novel therapeutics for the treatment of serious diseases caused by excessive or uncontrolled activation of the complement system, a critical component of the innate immune system. The company was founded in 2008 and is headquartered in Cambridge, MA, U.S. The company’s ExtremeDiversity™ platform enables the production of synthetic macrocyclic peptides combining the diversity and specificity of antibodies with the pharmacological properties of small molecules.
Ra Pharma’s phase 3 product candidate, zilucoplan, is a once-daily self-administered, subcutaneous peptide inhibitor of C5. In December 2018, Ra Pharma announced positive top-line results from a phase 2 trial of zilucoplan in patients with generalized myasthenia gravis (gMG), achieving clinically meaningful and statistically significant reductions in both, primary and key secondary endpoints. Zilucoplan is currently being tested in phase 3 for the treatment of gMG with top-line results expected in early 2021. Further potential indications that are potentially addressable by zilucoplan include immune-mediated necrotizing myopathy (IMNM), amyotrophic lateral sclerosis (ALS) and other tissue-based complement-mediated disorders with high unmet medical need. Ra Pharma is also developing an extended release formulation of zilucoplan, as well as a potential first-in-class oral small molecule C5 inhibitor.
Jean-Christophe Tellier, CEO UCB said: “Ra Pharma is an excellent strategic fit addressing multiple areas of UCB’s patient value growth strategy. Upon closing, the acquisition will add to our strong internal growth opportunities – six potential product launches in the next five years, strengthening our neurology and immunology franchises with late and early-stage pipeline projects. In addition, the combination will provide us with the opportunity to become a leader in treating people living with myasthenia gravis, an auto-antibody mediated neurological orphan disease with high unmet medical need, as well as adding a highly productive technology platform to our innovation engine.”
Strategic Rationale
The proposed acquisition is part of UCB’s strategic growth path, namely the “Accelerate and Expand” phase since January 2019. The addition of Ra Pharma’s ‘pipeline in a product’ investigational peptic C5 inhibitor zilucoplan alongside UCB’s anti-FcRn rozanolixizumab, could create an opportunity to provide more people living with myasthenia gravis with better treatment options. Beyond myasthenia gravis, this acquisition has the potential to enable UCB to offer new treatment opportunities for several rare diseases in neurology and immunology as well as different delivery forms, including extended release and orally available products. The combined portfolio may also offer synergies in the outreach to people with rare diseases and the health care market.
Additionally, UCB would gain access to a proprietary technology platform to produce synthetic macrocyclic peptides. The platform, known as ExtremeDiversity™, is based on messenger ribonucleic acid (mRNA) display and combines the diversity, specificity and high affinity of therapeutic antibodies with the attractive pharmacological properties of small molecules. It has the potential to augment UCB’s drug discovery capabilities and provide access to Ra Pharma’s proven expertise and talent in this area. UCB will also further strengthen its presence in the U.S., in particular the innovation hub in the Boston, Massachusetts area (U.S.).
Doug Treco, Ph.D., President and Chief Executive Officer of Ra Pharmaceuticals commented: “UCB shares our commitment to the rare disease patient community and our goal of developing novel, accessible, and cost-effective therapies in the areas of immunology and neurology. I firmly believe it is the right partner for us to advance new treatment options from our unique early and late stage pipeline to patients. Ra Pharma’s technology platform is an ideal addition to UCB’s leading innovation capabilities, and our scientists are looking forward to working with the entire team at UCB.”
Transaction Terms, Approvals and Timing to Close
Upon closing, Ra Pharma shareholders will receive US$48.00 in cash for each Ra Pharma share (approximately US$ 2.5 billion / € 2.2 billion), which represents a transaction value of approximately US$ 2.1 billion / € 2.0 billion, net of Ra Pharma cash at June 30, 2019 of approximately US$315 million. The cash consideration represents an approximately 93% premium to Ra Pharma shareholders based on the 30-day volume weighted average closing stock price of Ra Pharma prior to signing. The transaction has been unanimously approved by the Boards of Directors of both, UCB and Ra Pharma and remains subject to approval by Ra Pharma shareholders, obtaining anti-trust clearance and other customary closing conditions. UCB and Ra Pharma expect to complete the transaction by the end of Q1 2020.
Funding
The acquisition of Ra Pharma will be financed by a combination of existing cash resources and new bank term loans, arranged and underwritten by BNP Paribas Fortis and Bank of America Merrill Lynch. Pro-forma for this acquisition, UCB’s new net debt / rEBITDA ratio would be in the range between 1.5 and 2.0 times with rapid de-leveraging expected allowing UCB to maintain significant balance sheet flexibility.
Financial Guidance
This acquisition will not impact UCB’s 2019 financial guidance. The acquisition would be dilutive to UCB’s mid-term earnings level due to R&D investments. As a result, the mid-term target of UCB reaching a rEBITDA ratio (to revenue) of 31% would move to 2022 from 2021 as previously guided. The acquisition is expected to be core EPS accretive from 2024 onwards and would enable accelerated top and bottom line growth for UCB from 2024 onwards.
Advisors
Bank of America Merrill Lynch and Lazard are acting as financial advisors to UCB in relation to the transaction. Covington & Burling LLP is acting as legal advisor to UCB on this transaction.
Centerview Partners is acting as exclusive financial advisor to Ra Pharma on this transaction. Latham & Watkins LLP is acting as legal advisor to Ra Pharma on this transaction.
Conference call
Today, at 9:00am (EDT) / 2:00pm (BST) / 15:00 (CEST), UCB will host a conference call for the financial community. The login details can also be found on: https://www.ucb.com/investors/.
US: +1 6467224916; UK: +442071943759; Belgium: +3224035816; France: +33 172727403
PIN: 20542874#
About Generalized Myasthenia Gravis (gMG)
Generalized myasthenia gravis is an unpredictable, chronic auto-immune condition in which auto-antibodies attack specific proteins in the neuro-muscular junction. This disrupts the way that nerves can communicate with muscles, resulting in muscle weakness and fatigue. Both men and women are impacted equally, and it can occur at any age and in any race. Myasthenia Gravis is a rare disease impacting almost 200,000 patients in the US, EU and Japan (Gilhus N, N Engl J Med 2016;375:2570-812015). Those living with gMG can experience a variety of symptoms, including drooping eyelids and double vision as well as severe muscular weakness that can result in life threatening weakness of muscles of respiration.
About Immune-Mediated Necrotizing Myopathy (IMNM)
Immune-mediated necrotizing myopathy (IMNM) is a rare, serious, progressive neurological condition marked by severe proximal (for example hip and shoulder) muscle weakness. Auto-immune myopathies have a prevalence of around 15 cases per 100,000 with IMNM about 10-15% of all IMM cases. This suggests that there are more than 6,000 patients in each of the US and EU. (Anquetil et al. Autoimmunity Reviews 18 (2019) 223–230) IMNM is only recently understood to be a distinct entity within the broad group of idiopathic inflammatory myopathies and as of yet there are no approved therapies.
Amyotrophic Lateral Sclerosis (ALS) is a rare and progressive degenerative disease of the motor neurons affecting more than 200,000 people globally (30,000 in the US alone). in the central nervous system (brain and spinal cord) involved in muscle movement, leading to muscle weakness and ultimately paralysis. For more information, please visit www.ALS.org
Zilucoplan is a macrocyclic peptide designed to bind complement C5 with sub-nanomolar affinity and allosterically inhibit its cleavage into C5a and C5b upon activation of the classical, alternative, or lectin pathways and block the membrane attack complex (MAC) assembly. Zilucoplan is in clinical development at Ra Pharmaceuticals and is not approved in any region of the world. In addition to a recently-initiated phase 3 study in gMG and an upcoming phase 2 study in IMNM, zilucoplan was selected as one of the first drugs to be tested in a multi-center ALS platform study sponsored by the Sean M. Healey & AMG Center for ALS at Mass General.
About Ra Pharmaceuticals Inc.
Ra Pharma is a clinical-stage biopharmaceutical company focused on leading the field of complement biology to bring innovative and accessible therapies to patients with rare diseases. Ra Pharma discovers and develops peptides and small molecules to target key components of the complement cascade. For more information, please visit: www.RaPharma.com.
About UCB
UCB, Brussels, Belgium (www.ucb.com) is a global biopharmaceutical company focused on the discovery and development of innovative medicines and solutions to transform the lives of people living with severe diseases of the immune system or of the central nervous system. With more than 7 500 people in approximately 40 countries, UCB generated revenue of € 4.6 billion in 2018. UCB is listed on Euronext Brussels (symbol: UCB). Follow us on Twitter: @UCB_news
SOURCE: UCB
