French drugmaker Sanofi has announced an agreement to acquire US-based biopharmaceutical company Provention Bio Inc (NASDAQ:PRVB), which focuses on autoimmune diseases, for $25 per share in cash, or a total equity value of about $2.9 billion.
Provention Bio’s stock surged more than 250% in early trading on Monday, while shares of Sanofi slipped 1%.
The deal is expected to bolster Sanofi’s portfolio of diabetes medicines by adding TZIELD, a new therapy recently approved in the US as the first disease-modifying treatment for the delay of Stage 3 type 1 diabetes (T1D).
The two companies had previously agreed to work towards the commercialization of the drug and to co-promote the treatment in the US.
According to a report by Bloomberg, Sanofi would get a new medicine to complement a handful of its older diabetes therapies based on insulin, while the move would help diversify its basket of fast-growing products beyond blockbuster skin treatment Dupixent.
The US Food and Drug Administration (FDA) approved Provention’s ZIELD in November to delay the onset of type 1 diabetes in adults and children eight years and older who have abnormal blood sugar levels but who haven’t yet received a clinical diagnosis.
The FDA said at the time that while the high-priced drug is not a cure, it could provide patients “with months to years without the burdens of disease”.
Provention Bio also has a pipeline of experimental therapies that include drugs targeting celiac disease and lupus.
Sanofi said it expects it to close the acquisition in the second quarter of this year and plans to fund the deal with cash on hand.
Contact Sean at sean@proactiveinvestors.com