Specialty drugmaker Swedish Orphan Biovitrum (Sobi) has given the cold shoulder to a potential buyer, that may or may not be Pfizer ($PFE), who was not giving it the kind of financial appreciation that it believes it deserves. But given the frenetic M&A market, an analyst says it is probably just a matter of time before someone snaps up the orphan drugmaker.
In a one-paragraph statement, the Swedish company said only that it has "terminated discussions" regarding the nonbinding offer it had received April 27. A Sobi spokesperson told Reuters that the company put the kibosh on the discussion because the bidder hadn't made an offer it felt like was worth recommending to its owners.
Of course walking away from the bargaining table can be a tactic to extract a higher offer or attract another bidder. Pfizer, which has a partnership to sell Sobi's blood clotting treatment ReFactoAF, is in the market for deals. Biogen ($BIIB), which sells in the U.S. two products developed with Sobi, has also been mentioned as the possible suitor.
The news trimmed some value off of Sobi's shares, but Johan Unnerus, an analyst with Swedbank, told Reuters today that it probably is a matter of time before someone grabs the orphan drugmaker. "The market is so big I wouldn't be surprised if in the end they will be part of another company," he said, offering Biogen as his pick as a buyer. Sobi has a market cap of $3.5 billion, making it an affordable target in a deal frenzy where offers are in the tens of billions of dollars.
Its place in orphan drugs puts it squarely in the sweet spot of the M&A activity right now. In a recent report, Moody's SVP Michael Levesque pointed out that nearly half the M&A deals in the current splurge involved orphan drugs, those that treat serious conditions that affect fewer than 200,000 patients. With their pricing leverage, companies that make them will continue to be popular. In fact, Bloomberg reported today that Irish drugmaker Shire ($SHPG) had made offer of about $18.9 billion to buy Swiss drugmaker Actelion, whose portfolio includes orphan products.