Sun Pharmaceutical Industries Limited and Concert Pharmaceuticals, Inc. declared today that they have signed a legally binding agreement under which Sun Pharma will tender all of Concert’s outstanding shares for an initial cash payment of $8.00 per common share, or $576 million in net worth, in exchange for Concert’s outstanding shares. Additionally, Concert shareholders will receive a non-negotiable contingent value right (CVR) entitling them to receive cash up to an additional $3.50 per common share, payable if deuruxolitinib achieves certain net sales milestones within certain time frames, subject to the terms of a contingent value rights agreement defining the terms of those rights. The boards of directors of both firms have given their approval to the deal.
In comparison to the 30-day volume-weighted average trading price as of January 18, 2023, the final trading day prior to the announcement of today, the initial cash payment of $8.00 per common share represents a premium of over 33%.
A late-stage biotechnology business called Concert is leading the way in the field of medicinal chemistry by using deuterium. Concert has a sizable patent portfolio, which includes its flagship pharmaceutical candidate, deuruxolitinib, an oral Janus kinase JAK1 and JAK2 inhibitor that is being developed for the treatment of the autoimmune dermatological disorder alopecia areata. Concert has finished evaluating the effectiveness and safety of deuruxolitinib in its Phase 3 clinical program, THRIVE-AA, and two lengthy, open-label extension trials in adult patients with moderate to severe alopecia areata. both North America and Europe are in full swing. Sun Pharma’s first objective right away would be to carry out Concert’s strategy and submit an NDA to the US Food and Drug Administration (FDA) in the first half of 2023.
An autoimmune condition called alopecia areata causes the immune system to assault the hair follicles, leading to a partial or total loss of body and scalp hair. Up to 2.5% of people in the US and around the world could get alopecia areata in their lifetime. Although any place with hair might be affected, the scalp is the most frequently affected area. Both men and women can be affected by the disease, which can appear at any time in life. Anxiety and depression are two major psychological effects that can be brought on by alopecia areata. There are currently few alternatives for treating alopecia areata.
“Sun Pharma is in the process of establishing a global franchise in dermatology and ophthalmology and aims to become a preferred commercial and development partner for these therapies worldwide. The acquisition of Concert adds a potentially best-in-class advanced treatment for alopecia areata, deuruxolitinib”, “There is a significant unmet need in the treatment of alopecia areata and we want to build on Concert’s commitment to supporting the alopecia areata patient community. We are well positioned to successfully bring this product to market internationally. I look forward to welcoming the exceptionally talented team at Concert who have worked tirelessly to develop this product to bring it to market.”
Abhay Gandhi, CEO of Sun Pharma for North America
“We are pleased to complete this exciting transaction with Sun Pharma, which brings substantial value to our shareholders and is the result of a rigorous evaluation process overseen by Concert’s Board of Directors”, “Our mission at Concert has always been to translate scientific innovations into clinical solutions to significantly improve the lives of patients. We are proud to see one of our team’s accomplishments – the development of a valuable new drug candidate for a serious disease with limited treatment options – duly recognized and appreciated by Sun Pharma as a means of extending its ongoing international commitment in dermatology. I am confident that this transaction will maximize value for our shareholders and improve access to deuruxolitinib for patients with alopecia areata.”
Roger Tung ., Ph.D., Chairman and CEO of Concert
Terms of the Agreement and the Closing Date
Sun Pharma will immediately start a tender offer to purchase all of Concert’s outstanding common stock in accordance with the provisions of the merger agreement. Shareholders of Concert will get a $8.00 initial cash payout for each common share. The board of directors of Concert unanimously advises that shareholders of Concert tender their shares in the tender offer.
Additionally, Concert shareholders will receive a non-negotiable contingent value right (CVR), which entitles them to receive cash up to an extra $3.50 per common share, payable if deuruxolitinib meets certain net sales milestones within certain time frames, subject to the terms of a contingent value rights agreement defining those rights.
Subject to the conditions outlined in the Contingent Value Rights Agreement, these milestones consist of: I $1.00 per common share, payable the first time net sales of deuruxolitinib equal or exceed to $100 million during; and (ii) $2.50 per common share, payable the first time net sales of deuruxolitinib equal or exceed $500 million in any four consecutive quarters between the time of the drug’s first commercial sale in the United States and December 31, 2029. It is impossible to guarantee that any payment will be made in accordance with the CVRs.
The deal is anticipated to be completed in the first quarter of 2023. The deal is contingent upon the majority of Concert’s existing common shares being offered for sale, as well as the fulfilment of other standard closing requirements and the acquisition of necessary regulatory clearances. Following the successful completion of the tender offer, Sun Pharma will combine with Concert at the same price of $8.00 per common share plus a non-tradable CVR in order to acquire all shares of Concert that were not tendered into the tender offer as well as all of its preferred shares. As soon as practically possible following the tender offer’s closure, the merger will take place.
Concert reported $29,000 in revenue for the nine months that ended on September 20, 2022, and a net loss of $90.6 million. The total cost of R&D for this nine-month period was $75.7 million. Concert has around $148.9 million in cash, cash equivalents, and investments as of September 30, 2022.
On September 30, 2022, Sun Pharma had $1.6 billion in net liquidity.