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AstraZeneca to buy Alexion for $ 39 billion in Rare-Disease Push

(Bloomberg) – AstraZeneca Plc, a leading manufacturer of drugs for Covid-19, highlighted where its post-pandemic growth will come from with a $ 39 billion deal for rare disease specialist Alexion Pharmaceuticals Inc. The acquisition of shares will add treatments for uncommon blood and immune diseases to AstraZeneca’s portfolio of Cambridge, UK, that had removed years of older and less profitable products to focus on cancer. As the pandemic choked economies and AstraZeneca hit a relatively low score, Oxford University Chief Executive Officer Pascal Soriot’s return project to develop a Covid-19 vaccine kept the look down. After months of patients avoiding hospitals and clinics for fear of exposure to the virus, vaccinations are being put online that promise to restore society and the drug industry to normal. The purchase is “an important step in the company’s history”. Soriot said when he called reporters. “It is a tremendous opportunity for us to accelerate the development of immunological therapies. High-priced drugs for rare diseases can generate billions in sales for relatively few patients.” Sourcing from drug makers who are focused on them has been a popular method for larger pharmaceutical companies in recent years to drive sales growth. The offer values ​​Alexion at $ 175 per share, a 45% premium over Friday’s closing price. It is the largest deal for AstraZeneca since its inception in a combination of UK and Swedish companies in 1999 and would cement its position among the 10 largest pharmaceutical companies in the world. It is also the largest acquisition of pharmaceuticals and biotechnology this year, as well as the fourth largest deal worldwide in any sector, according to Bloomberg. The news gives Soriot an opportunity to focus on something other than the company’s experimental coronavirus vaccine. AstraZeneca addressed questions about the effectiveness of the potential shot and how the late-stage trials were conducted. Before the pandemic, AstraZeneca was one of the hottest pharmaceutical companies, with around 70% growth in value over the past three years, producing cancer drugs like Lynparza, Imfinzi and Tagrisso, its biggest seller. Older brands like Seroquel are being dumped for schizophrenia while costly development programs are halted that likely have not been successful. However, a takeover attempt by Pfizer Inc., which Soriot fought off six years ago, taught the importance of scaling. AstraZeneca was taking a preliminary approach at Gilead Sciences Inc., Bloomberg reported in June. While those talks stopped, Alexion was able to get the UK drug maker out of the reach of an acquirer. AstraZeneca has been relatively low in cash over the past few years and will also benefit from pulling the lucrative business from Alexion Fazeli, a Bloomberg intelligence analyst. CFO Marc Dunoyer said this will be AstraZeneca’s last big deal for a while. The new products will also allow Soriot to focus more on one of its priorities: the Chinese market, which now accounts for around a fifth of the company’s sales. Alexion doesn’t have a footprint in the country, making it the primary market for expanding the company’s reach. Flexion specializes in the development of drugs that selectively inhibit immune factors in order to fight diseases that affect the body’s own protective system. Soliris, the company’s largest product with sales of nearly $ 4 billion in 2019, is a monoclonal antibody used to treat rare conditions such as paroxysmal nocturnal hemoglobinuria. Monoclonal antibodies have attracted attention as two such drugs were manufactured by Eli Lilly & Co. and Regeneron Pharmaceuticals Inc. received an emergency permit to treat Covid in the US. Alexion announced plans in April to test another monoclonal antibody, Ultomiris, in critically ill patients with the late-stage disease. In the past, Alexion has been pressured to sit on the block. Activist investor Elliott Management Corp. turned down the company’s deal to acquire Portola Pharmaceuticals earlier this year, saying the transaction made no strategic sense and did not match Alexion’s focus on rare diseases. Trade finance on sale to AstraZeneca, owner of each Alexion share will receive $ 60 in cash and 2,1243 AstraZeneca American Depositary Shares, the British company said in a press release on Saturday. The drug maker will fund the acquisition with a $ 17.5 billion financing facility from Morgan Stanley, JP Morgan Chase & Co. and Goldman Sachs Group Inc. Despite the premium, the price is attractive to AstraZeneca, and the deal with Alexion could generate more deals, SVB Leerink analyst Geoffrey Porges said in a note. Alexion shareholders could hold $ 200 per share or go for a higher cash percentage, he said: “We believe that the debate over this transaction in the coming days and weeks will focus on whether that is enough and whether other bidders may show up as if that would be too much, ”wrote Porges. The current deal includes a $ 1.2 billion fee if Alexion agrees to sell to another bidder, while AstraZeneca faces a $ 1.4 billion demolition fine. The acquisition is expected to close in the third quarter of 2021 and Alexion shareholders would own 15% of the combined companies. Alexion had sales of $ 5.9 billion for the twelve months to the third quarter of 2020, with a growth rate of 24%. AstraZeneca Rare Disease Headquarters The British company plans to set up its rare disease headquarters in Boston. There are no plans for major job cuts, Soriot said. The combined companies should have a dozen blockbuster drugs by 2023 – those with sales greater than $ 1 billion – up from nine as of 2019, Chief Financial Officer Dunoyer said on a conference call. The deal will increase earnings with annual synergies of approximately approximately 1 three years after completion, is estimated at $ 500 million. Evercore Partners International LLP and Centerview Partners UK LLP are the lead financial advisors to AstraZeneca, while Ondra LLP also advised. Bank of America Corp. worked with Alexion. You can find more articles like this at Sign up now for the most trusted source of business news. © 2020 Bloomberg LP