Sun Pharma Acquires U.S.-Based Concert For $576 Million

Sun Pharmaceutical Industries Ltd. announced the acquisition of Concert Pharmaceuticals, Inc., a U.S.-based late-stage clinical biopharmaceutical company with an extensive patent portfolio, including the potential treatment of Alopecia Areata, an autoimmune hair loss disease.

According to the filing, Sun Pharma will acquire all outstanding shares of Concert through a tender offer for an upfront payment of $8 per share of common stock in cash or $576 million (around Rs 4,680 crore) in equity value.

Subsequently, the stockholders will also receive a non-tradeable contingent value right, entitling them to receive up to an additional $3.50 per share of common stock in cash which would be payable upon deuruxolitinib (Alopecia treatment drug which is in late-stage development) achieving certain net sales milestones within specified periods. However, the same shall be subject to the terms and conditions contained in the agreement.

The transaction has been approved by the boards of directors of both companies, the company disclosed in the exchange filing and is expected to be completed in the first quarter of 2023.

"The upfront payment of $8 per share of common stock in cash represents a premium of approximately 33% to Concert’s 30-day volume weighted average price as of Jan. 18, 2023, the last trading day prior to today’s announcement."

Alopecia Areata is an autoimmune dermatological disease in which the immune system attacks hair follicles, resulting in partial or complete loss of hair on the scalp and body. Onset of the disease can occur throughout life and it affects both women and men.

Citing certain studies, the filing disclosed that Alopecia Areata may affect up to 2.5% of the United States and global population during their lifetime and that currently there are limited treatment options available.

Concert has completed the evaluation of the efficacy and safety of deuruxolitinib in adult patients with moderate to severe Alopecia Areata in its Phase 3 clinical programme. Two open-label, long-term extension studies are ongoing in North America and Europe.

The company disclosed that its immediate focus would be to follow Concert’s plan to submit a New Drug Application to the U.S. Food and Drug Administration in the first half of 2023.

Abhay Gandhi, chief executive officer North America, Sun Pharma said in the exchange filing, “Sun Pharma is building a global dermatology and ophthalmology franchise and aims to be a preferred development and commercial partner in these therapies worldwide."

The acquisition of Concert, he said, adds a late-stage, potential best-in-class treatment for Alopecia Areata in deuruxolitinib.

"There is a significant unmet need in the Alopecia Areata space and we aim to build on Concert’s commitment to supporting the Alopecia Areata patient community."

The filing disclosed that while the transaction is expected to be completed on or before March 2023, it can be as late as July 19, 2023 subject to necessary approvals and successful and timely completion of tender offer.

Also, following the successful closing of the tender offer, Sun Pharma will acquire all remaining shares of Concert that are not tendered into the tender offer and all shares of Concert’s preferred stock through a second-step merger at the same price of $8 per share of common stock, plus one non-tradeable CVR.

Sun Pharma had net cash of $1.6 billion (Rs 13,000 crore) as of Sept. 30, 2022.

Concert's Financials

• The revenue (which includes licensing and other income) for 2021 is $32.6 million, compared to $7.9 million for 2020, and $1.1 million in 2019.

• For the nine-month period ending September 2022, Concert reported total revenue of $29,000 and a net loss of $90.6 million.

• The R&D expense for the nine-month period was $75.7 million.

• As of Sept. 30, 2022, Concert had approximately $148.9 million (Rs 1,210 crore) in cash, cash equivalents and investments.