TOKYO -- The rapidly advancing field of cancer immunotherapy is pushing Takeda Pharmaceutical and its global competitors to make a series of bold deals in order to position themselves in one of the most promising areas in pharmaceuticals.
One major impetus for spending around 6 trillion yen ($55 billion) to take over Irish peer Shire is that Takeda finds itself playing catchup to the likes of Ono Pharmaceutical, the domestic rival that developed the blockbuster cancer medication Opdivo.
Takeda said Monday it is issuing about 770.3 million new shares to finance the Shire purchase, which will be completed Tuesday. During the news conference, Takeda CEO Christophe Weber identified cancer immunotherapy as a key area for investment.
On Friday, Takeda revealed that it is starting research collaborations with Noile-Immune Biotech, a Japanese startup, and with Memorial Sloan Kettering Cancer Center, headquartered in New York. The goal is to begin clinical trials on an immune-based cancer therapy, perhaps by the end of this year.
Although Shire lacks expertise in immunotherapy, it specializes in high-margin areas like hematology. Takeda expects earnings generated by Shire's drugs to bankroll the development of groundbreaking immunotherapy treatments.
Immunotherapy has become the fourth major approach to fighting cancer after surgery, chemotherapy and radiation. Takeda is looking in particular at chimeric antigen receptor T-cell therapy, or CAR-T, which rejiggers a patient's immune cells to attack cancer cells.
The process involves harvesting T-cells from the patient, genetically altering them and reintroducing them into the body. But the process is far more complicated than producing conventional pharmaceutical products, and therefore more expensive. In 2017, Swiss drugmaker Novartis made headlines in the U.S. by setting a price of $475,000 for a single infusion of its CAR-T treatment.
Unlike conventional drugs, for which development has largely stagnated, the field of immunotherapy is projected to grow into a $25 billion-plus market by 2022.
This outlook has triggered a series of megadeals. Gilead Sciences spent $11.9 billion in 2017 acquiring Kite Pharma, a fellow U.S. drugmaker that is strong in CAR-T therapy. In 2018, Pfizer purchased a stake in Allogene Therapeutics, another CAR-T developer based in the U.S.
But the most notable deal so far is Bristol-Myers Squibb's announced $74 billion acquisition of American biopharmaceutical rival Celgene. This comes just after Celgene spent about $9 billion last year buying the immunotherapy developer Juno Therapeutics.
Weber said Takeda will continue forming an alliance around immunotherapy, and that future acquisitions are practically inevitable. The area requires long-term commitment in research and development, making it prohibitive for a company to fly solo from start to finish.
The acquisition route carries its own risks, however. By purchasing Shire, Takeda now shoulders some 5.4 trillion yen in interest-bearing debt, about eight times the level at the end of last March.