NEW YORK/LOS ANGELES Swiss drugmaker Roche Holding AG ROG.VX is seeking financing for a potential bid for Alexion Pharmaceuticals Inc (ALXN.O), a transaction that if successful would be the largest healthcare deal of the year, two people familiar with the matter said on Friday.
Shares of Alexion surged 12.6 percent to close at $114.26 on the Nasdaq, valuing the U.S. drugmaker, which specializes in the treatment of severe, rare diseases, at more than $22 billion.
There is no guarantee that a bid for Alexion will materialize, added the sources, who asked not to be identified because the matter is not public.
Roche and Alexion declined to comment. Bloomberg first reported Roche's bid interest in the company.
Analyst Mark Schoenebaum of ISI Group said an impromptu survey of his clients showed some 55 percent believe a deal will happen, at a price no greater than $130.60, based on 173 responses.
Roche is best known for its portfolio of cancer drugs, including the blockbuster Avastin, as well as a growing diagnostics business. A buyout of Alexion would allow it to diversify into a newly lucrative area for drugmakers, said Guggenheim analyst Bret Holley.
"We continue to view this area (rare diseases) as very attractive, with high market penetration and strong drug pricing supporting substantial revenue growth," he wrote in a research note. "However, we would be very surprised if Alexion was actively soliciting an acquisition...we would expect that any deal to acquire the company would almost certainly be at a substantial premium."
An Alexion transaction would mark Roche's biggest acquisition since 2009 when it paid nearly $47 billion to gain full ownership of Genentech.
In 2011, French drugmaker Sanofi SA (SASY.PA) bought Genzyme Corp, the first company to show that it could make money from treatments for rare diseases, for $20.1 billion.
PROFITING FROM NICHE TREATMENTS
Pharmaceutical companies are increasingly interested in developing or buying orphan drugs or treatments for rare diseases, as their more conventional products have lost patent protection and consequently market share to generic competitors.
Drugs for rare diseases can command prices of more than $500,000 a year, and have been highly profitable for other biotech companies.
But Sanford Bernstein analyst Geoffrey Porges questioned whether a bid for Alexion would make sense for Roche in terms of improving its drug development pipeline or reducing costs.
"Unlike other acquisition targets, we view Alexion's assets and people as very ... specific," he said in a note. "We believe the synergies available to an acquirer of Alexion would be limited."
Alexion, based in Cheshire, Connecticut, currently sells Soliris, a treatment for two genetic disorders: paroxysmal nocturnal hemoglobinuria (PNH), a life-threatening blood disorder that can lead to anemia, pain and difficulty in breathing, and atypical hemolytic uremic syndrome (aHUS), which can damage vital organs including the kidneys, heart and brain.
Sales of Soliris, despite treating only a few thousand patients worldwide, are forecast by analysts to reach $1.5 billion this year and $2.6 billion by 2017 - thanks to a U.S. list price of around $440,000 per patient a year.
Alexion is also conducting trials of Soliris in patients with several other ultra orphan genetic diseases, a term used to define genetic conditions that occur in fewer than 20 people per million.
A bid for Alexion would make sense if Roche is serious about moving into the orphan drug space, said Janney Montgomery analyst Kimberly Lee. She said Roche had not been considered a likely player in that market, compared with companies like GlaxoSmithKline (GSK.L), Pfizer (PFE.N) and Sanofi.
Compared with the overall biotech sector - the Nasdaq Biotech Index .NBI has increased 45 percent over the past 12 months - Alexion's shares have lagged, up just 4 percent for the year before Friday's jump.
Shares of Roche have gained 45 percent over the past year.
Lee said a $120-a-share bid for Alexion had been rumored when the stock was trading near $98, but that price now would not be a large enough premium to get a deal done.
If it happens, a Roche bid for Alexion would mark the second potential biotech acquisition in less than two weeks. On June 30, cancer drugmaker Onyx Pharmaceuticals ONXX.O rejected as inadequate an unsolicited bid from Amgen (AMGN.O) that valued the smaller company at roughly $10 billion.
Shares of BioMarin Pharmaceutical (BMRN.O), another maker of drugs for orphan diseases, rose more than 7 percent on Friday.
A potential bid for Alexion would follow Roche's failed attempt last year to buy U.S. gene-sequencing company Illumina Inc (ILMN.O) for $6.7 billion after shareholders held out for a higher price.
(Additional reporting by Ransdell Pierson in New York; Editing by Michele Gershberg, Matthew Lewis and Leslie Gevirtz)