By agreeing to sell its just-under-50% stake in its drug joint venture with Samsung Biologics for up to $2.3 billion, Biogen has raised speculation about using the proceeds to grow its pipeline through deals with other biopharmas—while the soon-to-be sole owner said Samsung Bioepis will expand beyond biosimilars, into development of new drugs.

Samsung Biologics said the deal is expected to accelerate its R&D efforts for novel therapeutics in addition to expanding Samsung Bioepis’ biosimilars business.

“The full buyout of Biogen’s stake is expected to accelerate Samsung Bioepis’ biosimilar development capabilities and future performance in novel drug development, with improved autonomy and agility in business operations,” Samsung Biologics stated.

Samsung Bioepis has brought three biosimilars to market: BENEPALI® (etanercept), a biosimilar referencing Amgen’s Enbrel®; IMRALDITM (adalimumab), a biosimilar referencing AbbVie’s multi-indication Humira®; and FLIXABI® (infliximab), a biosimilar referencing Janssen Biotech (Johnson & Johnson)’s Remicade®.

The joint venture has won approval for a fourth biosimilar to which Biogen will retain commercial rights, BYOOVIZTM (ranibizumab-nuna), an approved biosimilar referencing Genentech, a Member of the Roche Group’s eye disease drug Lucentis® (ranibizumab). Biogen will also retain commercial rights to SB15, a biosimilar candidate referencing another eye disease blockbuster drug, Bayer/Regeneron Pharmaceuticals’ Eylea® (aflibercept).

“We believe biosimilars are essential to help sustain healthcare systems and represent an important value creation opportunity for Biogen,” Michel Vounatsos, Biogen’s CEO, said in a statement.

Michael Yee, an analyst at Jefferies, said Samsung Biologics’ buyout of Biogen’s 49.9% stake “suggests BIIB wants to raise money to go out and do deals and buy pipeline which can be risky and also means no [near-term] plans for a sale.”

Last month, Yee and other analysts discussed the possibility of Samsung buying out Biogen altogether—something now unlikely following the companies’ agreement. Investors will likely react negatively to that, Yee added, since they would have benefited more from a full Samsung acquisition based on a higher value deal.

Yee noted that Biogen ended the third quarter with nearly $4 billion ($3.923 billion) in cash, cash equivalents, and marketable securities.

“So, this deal adds more powder for BIIB to deploy over the next few years, which could be interesting since [small- to mid-] cap biotech valuations have significantly come down over the last 12 months,” Yee added.

Clamor for more deals

Yee also noted that investors have clamored for Biogen to deploy more capital for deals since:

  • Much of Biogen’s pipeline is in either early stages or risky indications.
  • The company has delivered several disappointing clinical trial data readouts, including Phase III results for tofersen (BIIB067) in superoxide dismutase 1 (SOD1) amyotrophic lateral sclerosis (ALS), Phase II results for its anti-tau antibody gosuranemab (BIIB092) in Alzheimer’s disease, and Phase III results for timrepigene emparvovec and cotoretigene toliparvovec two inherited retinal disorder gene therapies acquired when it bought Nightstar Therapeutics for $800 million in 2019.
  • Declining sales of multiple sclerosis (MS) drug Tecfidera® (dimethyl fumarate) due to generic competition and a longer sales ramp-up for another Biogen MS drug Vumerity® (diroximel fumarate).

During the first three quarters of 2021, Tecfidera sales plunged 55% to $1.465 billion from $3.233 billion in Q1–Q3 2020 due to competition from generics. Another reason is patients switching to Vumerity, whose sales rose to $285.5 million from $$25.4 million.

Samsung Biologics said it will continue to deliver biomanufacturing services, and expand its biopharmaceutical business by continuing to expand its production capacity, expanding operations globally, and expanding into new modalities such as messenger RNA (mRNA) and cell and gene therapies, and global expansion.

Biomanufacturing expansion

With expansion in mind, Samsung Biologics is building Plant 4, which at 256,000 liters (67,628 gallons) will break the company’s own record for a facility with the world’s largest biomanufacturing capacity. Also this year, the company plans to start construction on Plant 5, a new facility that will offer multi-modal product services.

Samsung Biologics said it was working to secure 350,000 square meters (about 3.8 million square feet) of additional land for Bio Campus II, which will be 30% larger than the size of the current site.

Samsung Bioepis was established in 2012, with Biogen taking a 15% stake and Samsung among global electronics giants seeking to diversify into biopharma. Under its original arrangement with Samsung, Biogen had an option to purchase up to 50% less one share in Samsung Bioepis—an option that Biogen exercised in 2018, when it shelled out KRW 748.6 billion ($673.4 million at the time; $618.7 million today).

Samsung Biologics has agreed to pay Biogen $1 billion cash at closing of the deal, and $1.25 billion to be split into two payments: One of $812.5 million due at the first anniversary of the closing, the other of $437.5 million due at the second anniversary.

Samsung Biologics also agreed to pay Biogen up to $50 million tied to achieving commercial milestones.

The deal is set to close upon the effectiveness of a securities registration statement to be filed by Samsung Biologics, regulatory approvals, and customary closing conditions.

Upon closing, Biogen said, it will recognize a GAAP gain on disposal within other income (expense), net in its consolidated statement of income.

Samsung Biologics’ board has approved the transaction, and also agreed to raise capital of KRW three trillion (about $2.5 billion) by issuing new shares. Proceeds from those shares will fund the company’s strategic growth plans, including the purchase of the Samsung Bioepis shares, Samsung Biologics said.

“The deal will further deliver Samsung Bioepis’ sales growth and operating margin improvements with streamlined operational efficiencies, budget surplus, and cash flow generation,” Samsung added.

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