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Jazz acquires Celator in $1.5 billion deal

Posted on over 1 year ago by Gerry Kennedy

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The Wall Street Journal kicked off rumors over the Memorial Day weekend that Ireland’s Jazz Pharmaceuticals ($JAZZ) was set to buy Celator ($CPXX), and early this morning, the two confirmed the $1.5 billion deal was to go ahead.

Jazz Pharmaceuticals said it will acquire Celator for $30.25 per share in cash--making the deal worth a total of $1.5 billion. The Irish company will gain access to the Ewing, NJ-based company's lead experimental blood cancer drug Vyxeos (CPX-351), which just last week gained an FDA “breakthrough therapy” designation.

The FDA’s designation--which speeds up its review of a new medicine--is for patients with therapy-related AML (t-AML) or AML with myelodysplasia-related changes (AML-MRC).

A recent Phase III trial met its primary endpoint by showing statistically significant improvement in overall survival; detailed data will be presented at ASCO next week.

Its current data for the drug showed median overall survival for patients treated with Vyxeos was 9.56 months compared with 5.95 months--a 3.61-month improvement in favor of Celator’s treatment against a chemotherapy agent known as 7+3.

The percentage of patients alive a year after randomization was 41.5% on the Vyxeos arm compared with 27.6% on the chemo arm, with the percentage of patients alive two years after randomization being 31.1% on the Vyxeos arm, compared with 12.3% on the 7+3 arm.

These data are particularly impressive considering that AML has a dismal survival rate, and fewer than 10% of patients with high-risk forms of the disease live more than 5 years after diagnosis, according to Celator.

The drug is a 5:1 formulation of the standard cancer treatments cytarabine and daunorubicin, packaged in a nanoscale delivery platform that Celator says can boost efficacy while limiting the risks of administering each drug on its own.

"Celator Pharmaceuticals is a strong strategic fit with Jazz Pharmaceuticals. Vyxeos will further diversify our product portfolio and is complementary to our clinical and commercial expertise in hematology/oncology," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals, in a statement. "As Celator is currently preparing a regulatory submission in the U.S. for Vyxeos, this acquisition would add a new orphan product with the potential for short- and long-term revenue generation and expansion of our international commercial platform."

Celator said before the merger that it plans to submit an NDA to the FDA by the end of the third quarter, with this deal also expected to be completed by that time.

"The planned combination of Jazz and Celator is highly complementary, as both companies are dedicated to bringing differentiated therapies to patients who have high unmet medical needs," added Scott Jackson, CEO of Celator, in the release. "We believe that Jazz Pharmaceuticals' clinical and commercial expertise in hematology/oncology and existing international infrastructure will help realize the value of Vyxeos as a treatment to patients with AML. After thoroughly evaluating our strategic options, our board of directors has unanimously determined that this all-cash transaction is in the best interest of our stockholders."

The small biotech currently has no revenue, but was worth around $740 million before the buyout speculation--meaning Jazz is paying around double its worth to get its hands on the drug.

Jazz said it expects to finance the deal with a combination of cash on hand and borrowings under its credit facility. 

The company has a market value of about $9 billion and had nearly $1 billion in cash as of March 31. Formerly based in California, Jazz undertook a tax inversion back in 2012 via the acquisition of an Irish drug company, making its legal home the (lower taxed) Ireland.

Its main drug is the narcolepsy treatment Xyrem, but the company has been looking to bulk up its oncology pipeline. It already sells two drugs for cancer: blood cancer treatment Erwinaze and Defitelio, which treats a rare but fatal complication of stem cell transplants given to certain cancer patients. The company made around $1.3 billion in total sales last year.

- see the release
- take a look at the WSJ’s report

Related Article:
Tiny Celator surges on promising cancer data and preps an FDA submission

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