Innoviva Inc. and La Jolla Pharmaceutical Company announced Monday that they had entered into a $149-million merger agreement.
California-based firms Innoviva Inc. and La Jolla Pharmaceutical Company announced Monday that they had entered into a $149-million merger agreement. Under the terms of the transaction, Innoviva is set to make its tender offer to acquire all outstanding shares of La Jolla on or before July 25.
The boards of directors of both companies unanimously agreed to the acquisition. The deal was also supported by some of La Jolla’s stockholders who were holding some 40% of the company’s outstanding shares.
“This acquisition represents a significant step forward in advancing our strategy to diversify operations and adds a highly complementary commercial franchise to our portfolio to accelerate long-term growth,” Pavel Raifeld, chief executive officer of Innoviva said in a statement. “We look forward to welcoming the La Jolla team to Innoviva and building upon the success of GIAPREZA and XERAVA.”
The buyout gives Innoviva access to two popular drugs, Giapreza (angiotensin II) and Xerava (eravacycline). The former is used in patients who have entered septic or other distributive shock and show dangerously low blood pressure; the latter is the first fully synthetic fluorocycline antibacterial agent, approved by the U.S. Food and Drug Administration to treat complicated intra-abdominal infections in adults. Both drugs netted La Jolla more than $40 million in sales last year.
Innoviva Doubling Down on Infectious Diseases
These additions further establish Innoviva as a formidable player in the profitable but highly competitive infectious diseases space. Last May, Innoviva completed its $113-million acquisition of the clinical biopharma company Entasis Therapeutics Holdings Inc, gaining control over its robust antibacterial pipeline. At the time of the buyout, Entasis had just revealed Phase III data showing that its candidate sulbactam-durlobactam reduced deaths in patients with carbapenem-resistant Acinetobacter baumannii-calcoaceticus infections.
The deal also transferred Entasis’ more immature candidates to Innoviva, including zoliflodacin, an agent against Neisseria gonorrhoeae; ETX0282CPDP, which targets Enterobacterales infections; and ETX0462, for Gram-negative Pseudomonas infections.
Innoviva is also working closely with another California innovator, Armata Pharmaceuticals, a biotech company that leverages bacteriophage therapeutics technologies to combat resistant and difficult-to-treat infections. The two entered into a securities purchase agreement in January 2020, in which Innoviva pledged to buy around $25 million in Armata stock upon the fulfillment of certain conditions. The second tranche of the deal was completed in March of the same year.
Armata is using these funds to advance its programs, including AP-PA02, its lead phage candidate targeting Pseudomonas aeruginosa. AP-PA02 is currently in mid-stage clinical development.
The other half of Innoviva’s business is a more-than-$20 billion global royalty portfolio in the respiratory diseases space, held in partnership with GlaxoSmithKline. It includes Relvar/Breo Ellipta, Anoro Ellipta and Trelegy Ellipta, all of which are used for the treatment of chronic obstructive pulmonary disease.
The La Jolla acquisition looks like a pretty good deal for Innoviva. At an initial price of $5.95 per share, Innoviva is paying a premium of around 70% to La Jolla’s 30-day volume-weighted average price. The buyer is also offering an additional $0.28 per share for proceeds from a non-core asset, bringing the transaction’s total to $6.23 per share. The deal is expected to close within 30 business days.
Once the agreement is complete, La Jolla will become a subsidiary of Innoviva and will no longer be listed on public markets.
