Ipsen SA will pour billions of dollars more into deal-making as the French drugmaker accelerates efforts to reinvent itself with a focus on innovative prescription medicines.
(Bloomberg) — Ipsen SA will pour billions of dollars more into deal-making as the French drugmaker accelerates efforts to reinvent itself with a focus on innovative prescription medicines.
Ipsen will have about €2.5 billion ($2.74 billion) available to spend this year and next on innovative products, Chief Executive Officer David Loew said in an interview. The total includes about €1.5 billion for 2023, Loew said, following the $952 million acquisition of liver disease therapy maker Albireo Pharma Inc. that closed in the first quarter.
Loew, an industry veteran who worked at Roche Holding AG and Sanofi prior to taking over at Ipsen in 2020, has doubled the size of the teams dedicated to screening potential targets. He has also defined a clearer mission for the company, which competes with Big Pharma for attractive assets by focusing on niche areas and promising partners that their projects won’t disappear into a large organization’s bureaucracy.
“You need to kiss a lot of frogs to find the prince,” Loew said. “We are screening thousands of companies or compounds per year.”
Ipsen shares rose as much as 1.7% in Paris trading. The stock has risen 4.9% this year, giving the company a market value of €8.8 billion.
Safety Net
The company is aiming for six to eight deals a year, the CEO said. The pace may increase after 2025 as rising sales from Ipsen’s basket of new medicines bolster the company’s firepower.
Acquisitions provide a safety net for Ipsen as sales decline for its top-selling medicine, the cancer drug Somatuline, said Michael Shah, an analyst with Bloomberg Intelligence. Somatuline’s sales dipped 13% in the fourth quarter amid competition from cheaper generics in the US and Europe.
When Loew joined in 2020, the company didn’t have an attractive drug pipeline but it’s in much better shape now, he said.
Ipsen expects to increase spending on research and development from 16% of sales to about 20% by the end of this year or the beginning of 2024. The fresh R&D spending will weigh on this year’s core operating margin, Loew said, which the company has previously indicated will probably drop to about 30% this year from 36.9% in 2022. However, funneling money into R&D will pay off with margin improvements by about 2025, Loew said.
Meanwhile, an experimental treatment for a rare skeletal disorder the company acquired in 2019 may still clinch regulatory clearance despite setbacks, the CEO said.
Ipsen has gathered a “robust” set of data to answer US regulators’ requests for more information on palovarotene, a potential treatment for fibrodysplasia ossificans progressiva, or FOP, he said. People with the disorder see muscles and tendons gradually replaced by bone, immobilizing them as their joints are slowly locked into place. The Food and Drug Administration is set to decide on the resubmission by August.
“Perhaps palovarotene is going to make it,” Loew said. “It’s a terrible disease. That’s why we gave this another go, even if we know that the probability is perhaps not that high.”
(An earlier version of this story was corrected after the company amended its available financial firepower.)
–With assistance from Gina Turner.
(Updates with analyst comment in seventh paragraph)
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