Ipsen and Clementia Pharmaceuticals announced that they have entered into an agreement for Ipsen to acquire Clementia Pharmaceuticals, including its key late-stage clinical asset palovarotene, an investigational retinoic acid receptor gamma (RARγ) selective agonist, for the treatment of fibrodysplasia ossificans progressiva (FOP), multiple osteochondromas (MO) and other diseases. The acquisition will proceed by way of a court-approved plan of arrangement pursuant to the Canada Business Corporations Act.
Continuing the transformation of Ipsen:
- Accelerating a global Rare Disease organization with the mission to bring treatment options for ultra-orphan diseases to patients worldwide
- Executing on a key strategic objective to increase the value of the pipeline with innovative first-in-class or best-in-class assets
- Acquiring a near-term launch opportunity of a largely de-risked asset with limited competition which enhances sustainable growth of the company with significant upside potential from additional indications
Palovarotene inhibits excess bone morphogenetic protein (BMP) signaling which is linked to the progression of FOP and MO, two well-characterized, ultra-rare/rare and severely-disabling bone disorders for which there are currently no treatment options available.
A New Drug Application (NDA) for palovarotene for episodic flare-up treatment of FOP is expected to be submitted to the U.S. Food and Drug Administration (FDA) in the second half of 2019, and subject to FDA approval, a first commercial launch is expected in mid-2020. A Phase 3 registrational trial evaluating a chronic dosing regimen for FOP, a Phase 2 trial for MO, and a Phase 1 trial for dry eye disease are also ongoing. Palovarotene has received Orphan Drug designation for FOP and MO from the FDA and the European Medicines Agency (EMA), and Fast Track, Breakthrough Therapy and Rare Pediatric Disease designations for FOP from the FDA.
David Meek, Chief Executive Officer of Ipsen, commented, “The acquisition of ClementiaPharmaceuticals accelerates the ongoing transformation of Ipsen as we are successfully executing on our external innovation strategy to identify and acquire innovative medicines to serve patients with unmet medical needs. Through this transaction, we will gain scientific expertise, exceptional talent, and a cornerstone ultra-rare disease drug candidate with rare pediatric disease and breakthrough therapy designations, potential U.S. approval in 2020 and additional indications to follow. We look forward to working closely with Clementia to successfully integrate two companies that share a similar patient-centric culture and the ambition to deliver new treatments to patients with unmet medical needs.”
Dr. Clarissa Desjardins, Chief Executive Officer of Clementia, commented, “I am proud of the entire Clementia team, whose tireless efforts have rapidly advanced palovarotene towards a planned NDA submission, and we are all grateful for the dedication of the patient community and our clinical trial investigators who have supported us along the way. Ipsen’s global commercial presence and capabilities will expedite our shared vision of bringing palovarotene to patients around the world as quickly as possible. We anticipate a smooth transition of our operations into the Ipsen organization that will continue Clementia’s vision of delivering palovarotene to patients worldwide.”
Under the terms of the agreement, Ipsen will pay US$25.00 per share in cash upfront on completion of the transaction, for an initial aggregate consideration of US$1.04 billion, plus deferred payments on the achievement of a future regulatory milestone in the form of a contingent value right (CVR) of US$6.00 per share upon FDA acceptance of the NDA filing for palovarotene for the treatment of MO, representing an additional potential payment of US$263 million. The initial cash consideration represents a premium of 77% to Clementia’s 30-day volume-weighted average stock price.
The transaction will be fully financed by Ipsen’s existing cash and lines of credit and significantly increases the level of net debt. It is expected to have a limited dilutive impact on Ipsen’s core operating margin for 2019 and 2020 given the costs of the ongoing clinical trials and preparation for the commercial launch of palovarotene. Consequently, Ipsen is updating its 2019 financial objectives and now expects:
- Sales growth of greater than 13.0% at current exchange rates (unchanged)
- Core operating margin of around 30.0% of net sales (previous guidance of around 31.0% of net sales), excluding other potential investments in pipeline expansion initiatives
The transaction will also be dilutive at the Consolidated Net Income level.
The Boards of Directors of both companies have approved the transaction. Completion of the transaction is anticipated to occur in the second quarter of 2019, subject to satisfaction of all closing conditions. The acquisition will proceed by way of a court-approved plan of arrangement pursuant to the Canada Business Corporations Act and will require, at the special meeting of Clementia shareholders expected to be held on or about April 9, 2019, the approval of at least 66 2/3% of the votes cast by Clementia’s shareholders present in person or represented by proxy as well as the approval of a majority of the votes cast by Clementia’s disinterested shareholders present in person or represented by proxy. A proxy circular relating to the special meeting of shareholders of Clementia and containing further details regarding the Arrangement and the agreement will be mailed to Clementia’s shareholders and made available on SEDAR and EDGAR.
The Board of Directors of Clementia, acting on the unanimous recommendation of the transaction committee comprised of independent directors and after having received an opinion from its financial advisor to the effect that the consideration to be received by Clementia shareholders pursuant to the plan of arrangement is fair from a financial point of view, has unanimously approved the arrangement. OrbiMed Private Investments IV, LP, Clementia’s largest shareholder with approximately 27.5% of Clementia’s total shares outstanding (on a non‑diluted basis) as of the date hereof, has entered into a support and voting agreement with Ipsen pursuant to which it has agreed to vote its Clementia shares in favor of the transaction. In addition, directors and officers of Clementia holding an aggregate of approximately 3.2% of the Clementia shares (on a non‑diluted basis) as of the date hereof have entered into support and voting agreements with Ipsen.
In addition to shareholders’ and court approval, the arrangement is also subject to other customary conditions. The arrangement agreement is subject to customary “fiduciary out” provisions, and a right in favor of Ipsen to match any superior proposal. A termination fee is payable to Ipsen in certain specified circumstances, including if it fails to exercise its right to match in the context of a superior proposal supported by Clementia.
Centerview Partners is acting as exclusive financial advisor to Ipsen and Goodwin Procter LLP and Davies Ward Phillips & Vineberg LLP are acting as U.S. and Canadian legal counsel to Ipsen, respectively.
Morgan Stanley & Co. LLC is acting as exclusive financial advisor to Clementia and Skadden, Arps, Slate, Meagher & Flom LLP and Stikeman Elliott LLP are acting as U.S. and Canadian legal counsel to Clementia, respectively.