ZS Pharma ($ZSPH), awaiting FDA approval for a kidney drug, saw its share value soar about 30% after Actelion confirmed that it's discussing a multibillion-dollar buyout with the company.
Bloomberg first reported the news Thursday afternoon, citing unnamed sources who said Actelion CEO Jean-Paul Clozel extended a $2.5 billion offer to ZS last month. Hours later, Actelion put out a terse statement confirming that "it has initiated preliminary discussions ... without any commitment on either party" and leaving it at that.
ZS's shares promptly jumped as investors read the news as a referendum on the prospects of ZS-9, the company's late-stage treatment for hyperkalemia. In Phase III studies, the drug succeeded in reducing the dangerously high blood potassium concentrations that characterize hyperkalemia, and the FDA has promised to hand down a final decision on it by May 26, 2016.
But an acquisition of ZS, by Actelion or anyone else, could be premature: Relypsa ($RYLP) is expected to get a yes or no from the FDA on the rival hyperkalemia treatment patiromer by Oct. 21, and the company has recruited Sanofi ($SNY) to help it market the drug thereafter. Taking the plunge on ZS before knowing how the agency decides on patiromer could be a risky proposition.
For Actelion, long the subject of takeover rumors, buying ZS would help it expand beyond its home territory of treatments for pulmonary arterial hypertension, and increasing its market value through acquisition could help make it less attainable to larger drugmakers potentially angling to scoop it up. Clozel has repeatedly stated that Actelion should be considered an acquirer, not a target, and the Swiss company has reportedly shaken off multiple overtures over the past few years.
Actelion is also in the midst of a surge, raising its revenue projections this year thanks to the growth of Opsumit, its latest drug for PAH. The company is expecting U.S. and European approval for the next-generation PAH treatment selexipag by year's end, and its pipeline also includes cadazolid, a treatment for Clostridium difficile-associated diarrhea, and ponesimod, in Phase III development for multiple sclerosis.