How a buyer's sudden withdrawal gave Ipsen a chance to fight for Albireo

Ipsen’s near-$1 billion deal for Albireo was among a trio of biopharma acquisitions that opened this year’s J.P. Morgan Healthcare Conference. But Ipsen only got a chance to bid thanks to a sudden withdrawal by another company, and the French pharma fought hard when the opportunity presented itself.

As announced on Jan. 9, Ipsen is paying $42 per share for Albireo, plus a contingent value right (CVR) of $10 per share tied to the potential FDA approval of Bylvay in biliary atresia. But a securities filing now shows that another company had offered $57 per share and a CVR worth $8 per share back in April 2022.

That interested buyer, coded “company A” in the filing, suddenly pulled out in May, forcing Albireo to look elsewhere for a deal. Luckily for Albireo, three other companies, including Ipsen, were serious enough about purchasing the rare disease player to lock horns in a bidding war, according to the securities filing.

Company A first expressed interest in a deal in early February 2022 and initially made a $45-per-share offer to purchase Albireo. After several revisions, company A reached its final offer of up to $65 per share, including the CVR, which represented an 82.7% premium to Albireo’s previous closing price.

But just as Albireo was preparing the transaction documents, company A suddenly walked away in May, saying its board had nixed the offer.

Company A’s withdrawal came a week before Albireo announced lower-than-expected Bylvay sales for the first quarter of 2022. Albireo’s stock price nosedived on the drug’s lackluster performance, and the price only fully recovered lost ground after the Ipsen deal announcement.

After talks with company A fell through, Albireo started moving along its discussions with Ipsen. But it was another firm, “company B,” that in August came forward with a non-binding offer to take over Albireo for $28 per share, plus a CVR worth $3 per share. The total amount, up to $31 per share, marked a 64.5% premium to Albireo’s closing price at the time.

In the meantime, “company C” had discussed a potential collaboration around Albireo’s Chinese operations in July. A month later, that firm said its interest was actually broader.

On Oct. 27, a representative from company C introduced a proposal to acquire Albireo for $35 per share. Before that, on Oct. 5, company B had already increased its offer to $31-per-share upfront, plus $4-per-share in CVR.

And in late September, Ipsen’s chief business officer Philippe Lopes-Fernandes reached out to his counterpart at Albireo, Constatine Chinoporos, “to convey Ipsen’s broader strategic interest in Albireo,” the securities filing shows.

A bidding was starting to take shape.

Hoping to get a better deal, Albireo reached out to company A again, which confirmed that it wouldn’t pursue a deal. Meanwhile, discussions about a potential ex-U.S. licensing partnership with a fifth player, “company D,” didn’t go anywhere.

During a November meeting, Albireo’s board decided to keep the deal talks in a small circle because there were a limited number of potential buyers with the ability to pull off an acquisition at a large premium.

So far, Ipsen had been moving relatively slow in the negotiations. It was only on Nov. 16 that the French pharma made its first offer for $32 per share upfront, plus a CVR of $5 per share.

By then, Albireo figured it was time to crank up the competition. The Boston biotech asked Ipsen and the two other remaining bidders to submit better proposals by Dec. 6.

Ipsen actually missed that deadline but assured Albireo that it was very much still interested in a deal.

Meanwhile, company B dialed up its offer to $33 per share, plus two CVRs totaling $7 per share, with both linked to Bylvay. By comparison, company C returned with $37 per share, plus two Bylvay-related CVRs worth altogether $5 per share.

Albireo wasn’t satisfied. The company informed the three bidders that it would only be willing to talk further upon an offer of at least $40 per share at deal closing, plus “meaningful” additional payments from a CVR.

Yet on Dec. 19, Ipsen got back to Albireo, offering to buy the biotech for $38 per share, plus $10 per share in CVR. The $48-per-share sum would represent a 136.6% premium to Albireo’s prior closing price.

Pushing once more, Albireo asked the bidders to submit their “final” offers by Jan. 6, 2023. After all that, Ipsen outbid the other companies with a total deal value of up to $52 per share.

By the time Albireo’s board signed off on the proposal, the total price marked nearly a 100% premium over Albireo’s volume-weighted average share price over the prior 30 trading days.