Credit: Shutterstock photoNovo Nordisk ( NVO ) is shedding its restraint and embracing acquisitions after all.
The Danish drugmaker, which has traditionally eschewed deals and looked inward to develop new treatments, signaled a desire to seek growth from outside its own labs as it disclosed a $3.1 billion takeover offer for Ablynx ( ABLX ).
Novo CEO Lars Fruergaard Jorgensen, who walked in his predecessor's footsteps in his first year at the helm, is now attempting to clinch Novo's biggest deal ever - despite Ablynx spurning two offers in less than a month. The strategy extends beyond Ablynx: Novo said it's reviewing other potential takeovers and, after years of relying mostly on in-house research, is keen to look elsewhere for new medicines.
"It marks a higher risk willingness and a willingness to obtain innovation from outside Novo Nordisk compared to what we historically have done," Chief Financial Officer Jesper Brandgaard said in an interview with Bloomberg.
Coming Off The Sidelines
Novo has sat out a recent wave of industry deals in which a handful of giants snapped up promising biotechnology companies. The company has spent less than $500 million on mergers and acquisitions over the past decade, according to data disclosed by Novo.
Swiss rival Roche Holding ( RHHBY ), by contrast, committed three times as much just last month when it agreed to buy U.S. biotech firm Ignyta ( RXDX ). Other pharmaceutical transactions last year include Johnson & Johnson 's ( JNJ ) $30 billion purchase of Swiss biotech Actelion Ltd. and Gilead Sciences ' (GILD) $11.9 billion takeover of Kite Pharma.
The 51-year-old Jorgensen may find he's not the only one interested in Ablynx. Novo isn't aware of other suitors, Brandgaard told reporters on a conference call, but some may emerge now that Novo's interest is out in the open. Ablynx shares surged more than 49% to close at 38.62. Novo shares ticked down 5 cents to 54.69.
Belgium-based Ablynx said late Monday that Chairman Peter Fellner has resigned from the board. Fellner, 74, had served as chairman since 2013 and had been slated to step down later this year. Ablynx gave no reason for the departure.
Fellner has had numerous corporate board appointments, and was a member of the advisory group to Novo A/S, an investing arm of the Novo Nordisk Foundation, until January 2016. He'll be replaced as chairman by Bo Jesper Hansen, a non-executive director, the company said in a statement.
Low Profile
Jorgensen is working to beef up a unit that has traditionally had a low profile. The business of selling treatments for rare blood disorders makes up only a fifth of its sales and is overshadowed by the company's diabetes operations.
Unless the unit gets split off it needs to grow, said Kim Nielsen, a fund manager at C Worldwide Asset Management in Copenhagen.
"Otherwise you risk it being too small or too uninteresting," said Nielsen, who holds Novo shares. "Overall I feel confident they should do something like that."
Novo went public after Ablynx rejected a proposal that includes an upfront cash offer of 28 euros a share and additional cash payments known as contingent value rights of up to 2.50 euros per share tied to the success of two experimental medicines. The maximum payment is 44% more than the stock's closing price on Friday in Brussels.
Partners In The Past
The choice of target isn't a shot in the dark: The two companies have been involved in a research collaboration since 2015.
Ablynx's most advanced drug, caplacizumab, addresses a rare disorder called acquired thrombotic thrombocytopenic purpura, in which blood clots form in small blood vessels throughout the body. The illness can block the flow of blood to the body's organs, according to the U.S. National Heart, Lung and Blood Institute.
Jorgensen, who grew up on a family farm in Denmark and joined Novo in 1991 as an economist, replaced its retiring leader at the start of last year. He joined just as Novo's traditional diabetes business came under pressure from insurers and payers, who demanded lower prices in the U.S., Novo's largest market.
Ablynx "holds great potential and has highly competent employees," Brandgaard said. "This is a natural first asset for us to pursue."
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
