Astellas Pharma buys Iveric Bio for $5.9 billion

Japan's Astellas Pharma said on Monday it agreed to buy U.S. drugmaker Iveric Bio Inc for about $5.9 billion in its biggest acquisition, giving it access to a range of ophthalmology treatments.

The deal marks the fifth major overseas acquisition by Astellas, Japan's third biggest drugmaker by sales, since 2019 in a push to shore up its pipeline as its main sellers lose patent protection.

Through Berry Merger Sub Inc, a wholly-owned subsidiary of Astellas U.S. Holding, the Japanese company agreed to acquire Iveric for $40 per share in cash, Astellas said in a release.

The price is a 22% premium to Iveric's $32.89 closing price on April 28.

New Jersey-based Iveric, formerly branded as Ophthotech, is focused on developing treatments for retinal diseases.

The company's key asset is avacincaptad pegol (ACP), currently in trials for treating geographic atrophy, the advanced stage of macular degeneration, a common cause of vision loss in the elderly.

ACP, branded as Zimura, targets the C5 protein suspected in causing the growth of scarring associated with the disease.

The U.S. Food and Drug Administration in February granted priority review of ACP, and if approved, the treatment could be commercialised by the end of this year.

Along with treatments for menopause symptoms and bladder cancer, Astellas is counting on ACP to make up for the loss of sales exclusivity of its mainstay prostate cancer drug Xtandi, chief executive Naoki Okamura said at a briefing.

"We believe that this is going to be the third pillar," said Okamura, who ascended to the top job last month.

Astellas has been aggressively chasing acquisitions, announcing deals in late 2019 to buy U.S. biotech Xyphos Biosciences for up to $665 million and Audentes Therapeutics Inc for about $3 billion.

Its track record on acquisitions has been mixed, as the company had to book big impairments on Audentes.

"This deal, however, is mainly about a soon-to-be approved asset, and seems less likely to generate impairment losses," Jefferies analysts said in a note on the Iveric acquisition.

Astellas will fund the Iveric purchase via short-term loans and commercial paper amounting to about 800 billion yen ($5.8 billion).

Astellas shares gained 1.8% in Tokyo trading, outperforming a 0.7% advance in the benchmark Nikkei gauge.