March 1 (Bloomberg) -- Daiichi Sankyo Co., Japan’s third-largest drugmaker, agreed to buy Plexxikon Inc. for as much as $935 million, accelerating its expansion into cancer medicines.
Shareholders of Plexxikon, a closely held company based in Berkeley, California, will receive a one-time payment of about $805 million and as much as $130 million when its most advanced drug, PLX4032 for melanoma, reaches the market, Daiichi said in a statement today. The acquisition will be internally funded, the Tokyo-based company said.
Buying Plexxikon may enable Daiichi Sankyo to enter the U.S. cancer-drug market as early as 2012, said Atsushi Seki, an equities analyst at Barclays Plc in Tokyo. Daiichi and its Japanese rivals Takeda Pharmaceutical Co., Astellas Pharma Inc. and Eisai Co. are buying promising cancer medicines to tap a global oncology market forecast by IMS Health Inc. to expand by as much as 15 percent annually over the next two years.
“The purchase is giving Daiichi Sankyo an opportunity to set up a cancer business quicker than we assumed,” Seki said in a telephone interview. Daiichi will have to hire a sales team to promote the medicine once it’s approved, “but more drugs seem to be coming out of the pipeline to make up for it,” he said.
Regulatory approval to sell PLX4032 in the U.S. and Europe is expected to be sought this year, said Kathleen Sereda Glaub, Plexxikon’s president. The deal is possibly the largest acquisition of a closely held drug-discovery company to date, she said.
Daiichi gained 0.4 percent to 1,759 yen as of the 3 p.m. close in Tokyo trading, snapping a five-day losing streak. The Topix index advanced 1.3 percent.
An 8 percent gain in the yen against the dollar in the past year is making it cheaper for Japanese companies to purchase overseas assets. They announced 498 overseas acquisitions valued at a combined $26.68 billion in the past 12 months, according to data compiled by Bloomberg.
Fujifilm Holdings Corp., the Tokyo-based maker of imaging equipment and digital cameras, will buy two units of Merck & Co. that make biopharmaceuticals for 40 billion yen ($490 million), Nikkei English News reported yesterday without saying where it got the pricing information. Fujifilm confirmed the purchase, without giving a price.
Biopharmaceuticals, or protein-based medicines produced from living cells, are being used to target cancer and autoimmune conditions such as rheumatoid arthritis and Crohn’s disease. They comprised 5 of the world’s 10 bestselling medicines last year, according to Bloomberg data.
$80 Billion Market
Cancer-drug sales will expand 12 to 15 percent annually, reaching as much as $80 billion by 2012, according to Norwalk, Connecticut-based IMS Health. In contrast, annual sales growth for Japanese drugmakers is likely to average 1.4 percent from 2009 to 2015, according to London-based researcher Datamonitor Group Plc.
Plexxikon is developing PLX4032, also known as vemurafenib, with Basel, Switzerland-based Roche Holding AG. Roche and Daiichi Sankyo will jointly promote the drug in the U.S. when it is approved for sale, the statement said. Its patent expires in 2029, and patient studies began within three years of its discovery, Plexxikon’s Glaub said.
“This deal made a lot of sense to Daiichi,” she said in an interview today. The ability for Daiichi Sankyo to co-market PLX4032 “presented them with a near-term opportunity to jump-start what they wanted to do in oncology,” Glaub said.
The medicine, which is taken orally, targets the BRAF gene, a cancer-causing mutation expressed only in tumor cells, including about half of melanomas, 1 in 10 colorectal cancers, and about 8 percent of all solid tumors, Plexxikon said.
Plexxikon will operate as a unit of Daiichi Sankyo, and its 45 employees have been offered to keep their jobs, Glaub said. Plexxikon’s major shareholders include Alta Partners, Advanced Technology Ventures, and Walden International.
Plexxikon has PLX3397 for breast cancer, and PLX5622 for rheumatoid arthritis, in the first stage of patient studies, according to the statement.
Daiichi Sankyo had about 387 billion yen of cash and investments with maturities of less than 90 days as of Dec. 31, according to Bloomberg data. The Japanese drugmaker bought German biotech company U3 Pharma AG for 150 million euros ($207 million) in cash in 2008 and gained potential cancer treatments and in 2007 acquired rights to Amgen Inc.’s denosumab in Japan, a drug to protect the bones of cancer patients.
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