MW Halozyme says EUR2 billion takeover of Evotech would create leader in drug discovery

By Ciara Linnane

Halozyme says combined company would have an estimated $2 billion in revenue in 2025

The stock of German drug-discovery and development company Evotech SE jumped 4% early Monday, after Halozyme Therapeutics Inc. offered an update on its non-binding takeover proposal at 11 euros a share in cash, or a total equity value of EUR2 billion ($2.1 billion).

San Diego-based Halozyme $(HALO)$ said the deal, which it first mooted last week, would create an innovative pharma services company with complementary platforms and cross-selling opportunities.

Evotech $(EVO)$ has a proprietary platform of technologies used for drug discovery, development and biologic manufacturing. The Hamburg-based company partners with more than 500 biopharma companies around the world and has a pipeline with future potential revenue streams.

"Evotec Biologics is a pioneer in end-to-end continuous manufacturing, a breakthrough biologic manufacturing capability with 10 products in late-stage development and clinical manufacturing and more than 50 products in CMC development/IND enabling," Halozyme said in a statement.

CMC is chemistry, manufacturing and controls, a key part of the drug-discovery process, while IND stands for investigational new drug.

Halozyme is a leader in drug-delivery technology for the subcutaneous delivery of large-volume injected biologic drugs. The company is currently approved for eight products in more than 100 global markets and has a pipeline of expected near-term approvals.

The company has licensed its technology to companies including Roche Holding AG (CH:ROG), Takeda Pharmaceutical Co. Ltd. (JP:4502), Pfizer Inc. $(PFE)$, Janssen $(JNJ)$, AbbVie Inc. $(ABBV)$, Eli Lilly & Co. $(LLY)$ and Bristol Myers Squibb Co. $(BMY)$.

The deal "would meaningfully diversify, scale and extend Halozyme's revenue and adjusted Ebitda well into the next decade and beyond," the company said in a statement.

The combined entity would have about $2 billion in annual revenue in 2025. It's expected to maintain its 15% to 20% actual compound annual growth rate for revenue from 2023 into 2028 and to accelerate growth into the next decade.

The all-cash deal would be supported by an existing lender group and Halozyme has a clear path to less than 2x net leverage within two years after close.

The company is expected to end 2024 with cash of more than $800 million, so the deal would not be subject to a financing condition.

Halozyme's stock was down 1.2% premarket but has gained 24% in the year to date, while the S&P 500 SPX has gained 23%.

-Ciara Linnane

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

November 18, 2024 07:49 ET (12:49 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.