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Ipsen to Acquire US Drugmaker Epizyme for USD 247m
Monday 27 June 2022

French drugmaker Ipsen (Euronext: IPN) (OTC: IPSEY) and US-based Epizyme (NASDAQ: EPZM) have entered into a definitive merger agreement under which Ipsen will acquire Epizyme, the companies said.

The transaction was unanimously approved by both Ipsen and Epizyme Boards of directors and is anticipated to close by the end of 3Q22, subject to the satisfaction of all closing conditions.

Epizyme is a fully integrated, commercial-stage biopharmaceutical company developing and delivering transformative therapies against novel epigenetic targets for cancer patients.

The primary focus of the acquisition is on the lead medicine, Tazverik (tazemetostat), a first-in-class, chemotherapy-free EZH2a inhibitor, which was granted Accelerated Approval by the US Food and Drug Administration in 2020.

It is currently indicated for adults with relapsed or refractory follicular lymphoma whose tumors are positive for an EZH2 mutation as detected by an FDA-approved test and who have received at least two prior systemic therapies, and for adult patients with relapsed or refractory follicular lymphoma who have no satisfactory alternative treatment options, as well as for adults and pediatric patients aged 16 years and older with metastatic or locally advanced epithelioid sarcoma not eligible for complete resection.

Tazverik is currently in the Phase III stage of a registrational confirmatory study (SYMPHONY-1) in combination with rituximab and lenalidomide in patients with relapsed/refractory FL who have received at least one prior therapy.

Initial results from the Phase III randomized portion of this study are planned to read out in 2026.

As part of the transaction, Ipsen will also acquire Epizyme's first-in-class, oral SETD2 inhibitor development candidate, EZM0414, which was granted FDA Fast Track status and is currently under evaluation in a recently initiated Phase I/Ib trial in adult patients with relapsed or refractory multiple myeloma and diffuse large B-cell lymphoma, as well as a portfolio of preclinical programs focusing on epigenetic targets.

Ipsen said the acquisition of Epizyme will immediately provide incremental sales and will leverage the US commercial infrastructure.

Given the level of ongoing R and D expenses, the transaction is expected to be moderately dilutive on Ipsen's core operating income until the end of 2024.

This is in line with Ipsen's medium-term outlook regarding its strategic focus on building a high-value and sustainable pipeline through external innovation.

The dilutive impact on 2022 core operating margin will be limited, given the expected timing of the transaction.

The board of directors of Epizyme has unanimously approved the transaction and recommended that the stockholders of Epizyme tender their shares in the tender offer.

Royalty Pharma, Epizyme's largest stockholder with approximately 20.5% of Epizyme's total shares of common stock outstanding (on a non diluted basis) as of the date hereof, has entered into a support agreement with Ipsen pursuant to which it has agreed to tender its shares in the tender offer.

Under the terms of the agreement and plan of merger, Ipsen, through a subsidiary, will initiate a tender offer to acquire all outstanding shares of Epizyme at a price of USD 1.45 per share in cash at the closing of the transaction, for an initial estimated aggregate consideration of USD 247m plus one contingent value right per share.

Each CVR will entitle its holder to deferred cash payments of USD 0.30 per CVR payable upon the first achievement of USD250 m in aggregate net sales of Tazverik (excluding sales in Japan and Greater Chinac) in any period of four consecutive quarters, by 31 December 2026 and USD 0.70 per CVR payable upon receipt of US regulatory approval necessary for the commercial marketing and sale of the combination of Tazverik and R² (rituximab and lenalidomide) in second-line follicular lymphoma by 1 January 2028.

The USD 1.45 per share cash consideration represents a premium of approximately 144% compared to Epizyme's average closing price of USD 0.60 over the 30 trading days preceding announcement of the transaction. The transaction will be fully financed by Ipsen's existing cash and lines of credit.

Barclays is acting as exclusive financial advisor to Ipsen and Orrick Herrington and Sutcliffe LLP as legal counsel to Ipsen.

Epizyme is advised by both Jefferies and MTS Health Partners, L.P., joint lead financial advisors in connection with the transaction, with WilmerHale serving as legal counsel.

In addition, MTS Securities, LLC (an affiliate of MTS Health Partners, L.P.) provided an opinion to the board of directors of Epizyme regarding the fairness of the offer consideration to be received by the holders of Epizyme common stock in the transaction, subject to the qualifications and limitations set forth therein.
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Date Published: 27/06/2022

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