Before settling on a $5.4 billion price tag for Global Blood Therapeutics, Pfizer had to fight off a mysterious “company A.” Now, the identity of that contender has been revealed.
Johnson & Johnson was Pfizer’s rival bidder in acquisition negotiations with Global Blood Therapeutics, Bloomberg reports. In fact, known as company A, J&J was the one that set off the deal talks by proactively contacting GBT with a buyout offer before Pfizer came in, according to a securities filing.
J&J in May offered $55 per share to take over the sickle cell disease (SCD) specialist. In the following months, the global healthcare giant raised its pitch several times—first to $60 and then to $61.50, the filing shows. Following a report by The Wall Street Journal saying Pfizer was in advanced talks to buy GBT, J&J provided its final offer, $65, which came below Pfizer’s $67.50.
Had the deal gone J&J’s way, GBT would have been J&J’s largest acquisition in about two years and would've represented the conglomerate’s first major transaction under new CEO Joaquin Duato, who just took the helm from Alex Gorsky in January. Duato used to head up J&J’s pharma department.
Compared with Pfizer, J&J has lately been relatively quiet on the M&A front lately. J&J’s most recent large deal can be traced to its $6.5 billion acquisition of Momenta Pharmaceuticals in 2020. The target was nipocalimab, an FcRn inhibitor that holds promise for a range of autoimmune diseases, including rare diseases such as myasthenia gravis. At that time, Duato was J&J’s vice chairman, overseeing strategic directions of both pharma and consumer health as well as global supply chain.
On J&J’s second-quarter earnings call in July, Duato noted M&A as “an important component” of J&J’s strategy, counting 40 acquisitions groupwide in the past five years. For its pharma business, about half of J&J’s projects have come from the outside the company, he said.
"We try to look at those opportunities in the context of the improvement in standard of care, entering to higher-growth markets and delivering a fair financial return,” the CEO said at the time.
In pharma, the company’s dealmaking efforts will focus on its key therapeutic areas, he added, including immunology, oncology, neuroscience, pulmonary hypertension and cardiovascular and metabolism diseases.
Although recent decline in biotech value has created an opportunity for big pharma acquirers, Duato said J&J isn’t “opportunistic about it" and that it’s still “looking always at the fundamentals of these companies.”
For Pfizer, GBT brings with it an FDA-approved SCD drug, Oxbryta, as well as pipeline SCD candidates inclacumab and GBT601. Inclacumab is a P-selectin inhibitor currently in phase 3 trials to evaluate its ability to control vaso-occlusive crises. And GBT601, a sickle hemoglobin polymerization inhibitor, holds potential as a “functional cure” for SCD by improving both vaso-occlusion and hemoglobin, SVB Securities analysts pointed out in an earlier note.
GBT’s SCD franchise could reach $2.7 billion in annual sales by 2030, according to SVB’s estimates, which came above Wall Street consensus of $2 billion, the SVB team noted.
J&J has been involved in rare disease drug development for a long time and has paid top dollar for it. Most notably, J&J shelled out $30 billion in 2017 to acquire Swiss biotech Actelion and got a stable of pulmonary arterial hypertension drugs.
“Looking at the biopharma M&A landscape more broadly, we see the hematology/rare disease sector as an increasingly desirable area, given minimal [Federal Trade Commission] risk with specialized diseases, minimal payer pushback, and the lack of necessity for a large sales force,” the SVB team wrote in the note.