British pharmaceuticals producer GlaxoSmithKline has agreed to buy late-stage biopharmaceutical company Sierra Oncology.
GlaxoSmithKline said on Wednesday that it would pay $55 per share of common stock in cash, representing an approximate total equity value of $1.9 billion.
The acquisition is to be carried out through a one-step merger in which the outstanding shares of Sierra Oncology will be cancelled and converted into the right to receive $55 per share in cash.
Further, GlaxoSmithKline will account for the transaction as a business combination and expects it to be accretive to adjusted earnings per share in 2024, the expected first full year of the sales of the drug momelotinib for myelofibrosis patients.
In addition, new GlaxoSmithKline reaffirmed its full-year 2022 guidance and long-term sales targets.
As at December 31, 2021, the value of the gross assets of Sierra Oncology to be acquired is $109 million.
However, the net losses of the business were $95 million for the 12 months ending on the same date.
Sierra Oncology’s differentiated momelotinib has the potential to address critical unmet medical needs of myelofibrosis patients with anemia, the statement said.
Momelotinib complements GlaxoSmithKline’s Blenrep, building on its commercial and medical expertise in haematology, with Sierra Oncology anticipating U.S. regulatory submission in the second quarter of the year and an EU submission in the second half of 2022.
The company noted that the proposed acquisition aligns with GlaxoSmithKline’s strategy of building a strong portfolio of new specialty medicines and vaccines.
If the transaction is completed and momelotinib is approved by regulatory authorities, GlaxoSmithKline said it expects momelotinib to contribute to its growing specialty medicines business.
According to GlaxoSmithKline, sales are expected to begin in 2023, with significant growth potential and a positive benefit to the group’s adjusted operating margin in the medium term.
