Shares of The Medicines Company (NASDAQ:MDCO) jumped by as much as 22.7% right out of the gate this morning. The drugmaker's stock skyrocketed in response to a buyout agreement with Swiss pharmaceutical giant Novartis (NYSE:NVS) valued at $9.7 billion on a fully diluted basis. As of 10:13 a.m. EST, The Medicines Company's shares are up by 22.4% in the wake of this news.
Novartis' $85-per-share all-cash tender offer represents a healthy 25% premium compared to where The Medicines Company's shares finished trading last Friday. The deal is expected to close sometime in the first quarter of 2020, according to the press release.
The big deal is that this transaction adds yet another potential megablockbuster product to Novartis' rapidly growing lineup of cutting-edge products. Specifically, the Swiss pharma titan will gain the rights to the experimental cholesterol-lowering medicine inclisiran -- an RNA-interference therapy originally developed by Alnylam Pharmaceuticals and later licensed out to The Medicines Company. The Medicines Company shepherded the drug through a successful late-stage program, setting the stage for a regulatory filing in the U.S. before year's end and another regulatory submission in the EU in early 2020.
If approved, inclisiran would compete directly against Amgen's (NASDAQ:AMGN) Repatha and Regeneron and Sanofi's (NASDAQ:SNY) Praluent. Inclisiran's competitive edge, in theory, stems from its ability to be dosed far less frequently than these first-generation therapies.
That's key, because Amgen and Regeneron/Sanofi's respective drugs have both run into compliance problems since launch due to their inconvenient biweekly to once-a-month dosing schedules. Inclisiran, by contrast, can be administered just once every six months -- a feature that could significantly boost adherence rates.
That being said, Novartis is undoubtedly paying a steep price for an experimental drug set to enter a crowded space, with even more competition on the way.