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After Ablynx, is an acquisition of Galapagos next?

Written by ALB on in the category Insights with the tags , , .


The Gent biotech company Ablynx has been acquired by pharmaceutical giant Sanofi for 3.9 billion euros. The French Sanofi beat the Danish company Novo Nordisk to the deal after a much higher offer. Rumors are now flying as to the potential acquisition of another independent company: Galapagos. Whatever happens, 2018 is poised to be a big M&A year for the Belgian biotech industry.

In an interview with De Tijd, Edwin Moses, the CEO of Ablynx, says Sanofi sealed the deal very quickly.

Ablynx has always been an independent company. How did this change come about?

Moses: "Back in October we were perfectly positioned to develop Ablynx as an independent company over the coming years. Then came the purchase proposal from Novo Nordisk, which we thought was far too low. The board of directors subsequently did a 'market check' to see if there were any other interested parties. It soon became clear that there is a certain chemistry between us and Sanofi. We have held discussions and Sanofi confirmed the offer to us last night. In short, it all went pretty fast."

This is a sign of the strength of the pharma and biotech cluster in the region." - Edwin Moses
 

How do the shareholders feel about the news?

Moses: "It is a super deal for the shareholders. The bid price is double the share price of the first acquisition reports, and is even three times higher than the share price twelve months ago."

Is it also a good deal for the employees?

Moses: "This is a good thing for Gent. Sanofi has made it clear that it supports the further development of the expertise center in Gent and that it wants to accelerate the development of medicines with our technology."

How do you feel about the end of Ablynx as an independent company?

Moses: "Being independent is great, but this too. We have shown that you can build a 4 billion euro company here in Flanders. Remember Domantis, which developed a similar technology and was sold to GSK ten years ago? For barely 250 million pounds? If you compare Ablynx to that, you can see that we have taken big steps. This is a sign of the strength of the pharma and biotech cluster in the region. Think of Galapagos, Argenx and so many others. Some will also be taken over and others will remain independent until a Celgene or Biogen develops here."

Lenny Van Steenhuyse, financial analyst at KBC Securities, commented on the high offer and the future of Galapagos, another independent Belgian company.

A takeover this big generates a lot of attention from all over the globe. It puts Belgian biotech in the spotlight. - Lenny Van Steenhuyse
 

I’ve been told Ablynx wanted to stay independent? Do you think this takeover was expected or unexpected?

Van Steenhuyse: "When you look at companies like Ablynx and Galapagos they’ve always been clear that they've wanted to remain independent and try to build their own commercial activities. Of course from the moment that maturing biotech companies start having products that are close to the market, they become very interesting for larger pharma to take over. Ablynx must have been on the radar for quite a while."

It was basically an offer they couldn't refuse?

Van Steenhuyse: "An offer they couldn't refuse? Of course that depends: management can always wish to remain independent, but in the end it’s the shareholders that decide whether or not a takeover will go through. A lot of shareholders will give in to an offer to realize a return on their investment; management might get left out of that decision. Luckily, that doesn’t seem to have been the case with Ablynx."

Ablynx was one of the flagship biotech companies of Belgium. What effect is this takeover going to have on the Belgian biotech sector?

Van Steenhuyse: "I think in general, a takeover of this size is definitely going to put the focus back on Belgian biotech. A takeover this big generates a lot of attention from all over the globe. The first public bid on Ablynx by Novo Nordisk was the talk of town at the JP Morgan Healthcare conference, the largest biotech conference worldwide. It's quite natural for investors to then start looking at what else is developing here. When you see things like this popping up in the media, it puts Belgian biotech in the spotlight."

Do you also think an acquisition of Galapagos is about to happen?

Galapagos management have always been clear that they want to remain independent. But if the price is right and the shareholders agree with the offer, then the chances are that Galapagos is also going to be taken over." - Lenny Van Steenhuyse
 

Van Steenhuyse: "It’s possible of course. If you look at all the signs it’s hard to ignore that the momentum is there. Due to the U.S. tax reforms and large cash positions of big pharma, 2018 is already bound to be an M&A year for biotech. Galapagos has an asset with a large market potential, and the partner for that asset, Gilead, isn’t afraid to do large acquisitions. We saw this last year with the takeover of Kite for 12 billion dollars. Gilead is really looking to fill its pipeline, and Galapagos could be a doorway for them to get into the market of inflammatory diseases. Again: will management and shareholders be aligned on the Gilead offer? That remains to be seen. Galapagos management have always been clear that they want to remain independent. But if the price is right and the shareholders agree with the offer, then the chances are that Galapagos is also going to be taken over."

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