Recordati acquires EUSA Pharma and its 4 rare disease drugs, but analysts question strategy behind the deal

An Ital­ian phar­ma com­pa­ny en­gi­neered a near­ly $850 mil­lion buy­out last week look­ing to ex­pand its rare dis­ease port­fo­lio and fur­ther soak up parts of the US mar­ket, but ques­tions re­main over the drugs in­volved and when they could see pa­tient up­take state­side.

Recor­dati shelled out the cash to ac­quire EU­SA Phar­ma and its port­fo­lio of four rare dis­ease drugs, the com­pa­nies an­nounced Fri­day, al­low­ing Recor­dati to po­si­tion it­self — by its own ac­count — for growth in the US. EU­SA’s top can­di­date for ex­pan­sion is os­ten­si­bly the neu­rob­las­toma drug Qarz­i­ba, ap­proved in the EU for high-risk, new­ly-di­ag­nosed in­di­vid­u­als.

Dur­ing an in­vestor call, Recor­dati ex­ecs tout­ed a US ap­proval for Qarz­i­ba as a pos­si­ble key val­ue dri­ver in this deal. But when a Cred­it Su­isse an­a­lyst point­ed out EU­SA pre­vi­ous­ly stat­ed in press re­leas­es it ex­pect­ed to file Qarz­i­ba’s US ap­proval in 2017, an OK still hadn’t come through and there don’t ap­pear to be any on­go­ing clin­i­cal tri­als, the com­pa­ny had few an­swers for when it would ap­proach the FDA.

Chair­man An­drea Recor­dati large­ly de­murred, say­ing he couldn’t give any de­fin­i­tive time­lines be­cause the deal isn’t ex­pect­ed to close un­til next year.

‘We’re still in be­tween the sign­ing and clos­ing han­dling sit­u­a­tions, so we need to dis­cuss this, clos­ing EU­SA, and it’s not re­al­ly ap­pro­pri­ate to give them more de­tails at this stage,’ Recor­dati said on the call.

He went on to say while Qarz­i­ba is ex­pect­ed to be an ‘im­por­tant’ part of the com­pa­ny’s plans, Recor­dati is al­so look­ing at the rare lymph node dis­or­der drug Syl­vant as an­oth­er growth dri­ver, cur­rent­ly ap­proved in the US and EU.

The oth­er two drugs in the deal are Fo­tiv­da, a monother­a­py TKI for re­nal cell car­ci­no­ma ap­proved in the EU, and Caphosol, a med­ical de­vice used to treat mouth swelling af­ter chemother­a­py. Qarz­i­ba was al­so ap­proved by Chi­nese reg­u­la­tors in Au­gust, with EU­SA’s part­ner BeiGene, and Syl­vant al­so won a Chi­na ap­proval Fri­day.

EU­SA al­so has 200 em­ploy­ees and it re­mained un­clear on the call whether Recor­dati would be bring­ing all of them on board. Fresh­ly mint­ed CEO Rob Ko­re­mans, re­spond­ing to an­oth­er ques­tion from the Cred­it Su­isse an­a­lyst, not­ed Recor­dati does not have ‘very spe­cif­ic deep ther­a­peu­tic know-how in rare dis­ease on­col­o­gy’ and that EU­SA’s R&D team is a good fit for the com­pa­ny.

‘Our ob­jec­tive is to re­tain the know-how and the or­ga­ni­za­tion,’ Ko­re­mans said. ‘This is not a syn­er­gist dri­ven deal. This is a growth dri­ven deal. And al­so, ob­vi­ous­ly, a di­ver­si­fi­ca­tion deal, be­cause it al­lows us to en­ter a new and very at­trac­tive, un­der­served ther­a­peu­tic area where we don’t have the as­set ex­per­tise.’

Over­all, Recor­dati ex­pects the port­fo­lio ad­di­tions to bring in about $170 mil­lion in sales by 2023, with po­ten­tial peak sales of just over $282 mil­lion — though the com­pa­ny again de­clined to elab­o­rate on the ex­act time­line.

Out­side Fri­day’s ac­qui­si­tion, Recor­dati al­so owns a sub­sidiary that fo­cus­es pri­mar­i­ly on rare dis­eases. One of these drugs, Carbaglu, treats rare cas­es of N-acetyl­glu­ta­mate syn­thase de­fi­cien­cy and fre­quent­ly ap­pears near the top of the world’s most ex­pen­sive drugs list. In 2017, the drug cost more than $585,000.
https://endpts.com/recordati-acquires-eusa-pharma-and-its-4-rare-disease-drugs-but-analysts-question-strategy-behind-the-deal/