Japan-based pharma Kyowa Kirin has agreed to acquire gene therapy specialist Orchard Therapeutics in a deal worth up to $477.6 million. The buyout aims to strengthen Kyowa Kirin’s emerging presence in the high-potential genetic medicine field.
Under the terms, Kyowa Kirin will pay $16 per Orchard ADS in cash upfront, representing a 144% premium to Orchard’s recent share price. Orchard shareholders will also receive a contingent value right worth an additional $1 per ADS if certain regulatory milestones are met.
The total potential payout values the deal at $477.6 million. Kyowa Kirin expects the acquisition to close in Q1 2024 pending approvals.
Orchard focuses on developing therapies using genetically modified hematopoietic stem cells (HSCs) taken from patients themselves. Its treatments aim to correct the underlying genetic cause of diseases in a single administration.
The company’s lead asset is Libmeldy, approved in Europe for treating a rare metabolic disorder called MLD. It also has two other programs for pediatric neurological conditions in late-stage testing.
Beyond the commercial and near-term pipeline assets, Kyowa Kirin gains Orchard’s HSC gene therapy platform. This technology can be leveraged to develop new treatments for diseases in Kyowa Kirin’s wheelhouse like oncology, autoimmune disorders, and others.
Kyowa Kirin has made gene and cell therapy a priority as part of its vision to deliver transformative new medicines. Orchard’s proven development capabilities and leadership position in HSC gene therapy make it an ideal fit for this strategy.
The high premium paid reflects Orchard’s status as a pioneer in the burgeoning field of genetic medicine. The deal provides Kyowa Kirin immediate scale and expertise in leveraging gene therapy.
Kyowa Kirin also gains commercial infrastructure to support the global launch of Libmeldy. The FDA is currently reviewing Libmeldy for approval in the U.S. with a decision date in March 2024.
Orchard’s two other clinical programs in development also address rare pediatric neurological disorders with immense unmet need. Additional earlier stage preclinical assets add further upside to the pipeline.
The deal continues biotech industry consolidation as large players acquire innovators to reinforce their drug development pipelines. The competition among pharmas for gene therapy assets has intensified as the field matures.
For Orchard investors, the buyout represents a significant premium after a long stretch of the stock languishing. But with cash running low, the company faced challenges transitioning its pipeline programs to commercial status alone.
The deal provides ample resources to continue advancing Orchard’s mission of tackling rare genetic diseases. Kyowa Kirin expects to hit $1 billion in sales from the MLD treatment alone if approved in the U.S.
Gene therapy has disrupted drug development over the past decade with its potential to deliver curative, lifelong treatment through a single administration. As technology improves, dealmaking and R&D in the space continues gaining steam.
Kyowa Kirin is the latest pharma to bet big on gene therapy’s possibilities. If it can successfully harness Orchard’s specialized platform and assets, the deal may pave the way to developing life-changing genetic medicines while delivering solid returns to shareholders.