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Agios Pharmaceuticals Inc. said it agreed to sell its portfolio of oncology drugs toServier Pharmaceuticals LLC for $1.8 billion, in a move that will increase the biotechnology company’s focus on treatments for genetic diseases.
Included in the pact announced Monday with closely held Servier are two drugs for acute myeloid leukemia, Tibsovo, and Idhifa, which Agios co-commercializes withBristol-Myers Squibb Co. The drugs are expected to bring Agios sales this year of $114 million and $130 million, respectively, according to estimates compiled by Bloomberg. The deal also includes Agios’s oncology pipeline and clinical programs.
The sale represents a significant strategic shift for the Cambridge, Massachusetts-based company, which built its reputation on cancer treatments. Many large pharmaceutical companies have drawn outsize profits from innovative oncology treatments in recent years, and as a result it has become a crowded marketplace.
With those competitive pressures increasing, Agios’s shares have dropped by 30.5% this year. The stock jumped 19% in premarket trading on Monday.
Chief Executive Officer Jackie Fouse said in an interview that working on both cancer and genetic diseases, including funding programs and focusing resources, has been challenging. The race to keep up has meant studying two or more drugs in combination and running large, expensive research trials.
“It is a little harder for a company of our size and scale to do that,” she said. For genetic conditions, however, “many of these diseases don’t have any approved therapies yet.”
Earlier this month, Agios reported late-stage results from a trial of its therapy mitapivat for the rare genetic disorder pyruvate kinase deficiency, which if cleared by U.S. and European regulators could launch in 2022. It is also studying mitapivat for thalassemia and sickle cell disease. It began a phase 1 trial for another genetically focused drug, AG-946, in the third quarter.
As part of the deal, Agios is eligible for a $200 million milestone payment and royalties. After the transaction closes, which is expected in the second quarter, the company plans to return at least $1.2 billion to shareholders, ideally through share buybacks, Fouse said.
“This is a major decision for us,” Fouse said. “It’s going to allow us to create the most value for patients, our employees and our shareholders.”
Roughly a third of Agios’s 570 employees are expected to move to Servier in the deal.
Goldman Sachs Group Inc. and Morgan Stanley served as financial advisers to Agios, while Wachtell, Lipton, Rosen & Katz was its legal adviser for the deal.
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