Roche Acquires 89bio for $3.5 Billion, Driven by MASH Drug Potential

In a significant move that underscores the growing importance of metabolic dysfunction-associated steatohepatitis (MASH) treatments, Roche has announced its acquisition of 89bio for $3.5 billion. The deal, which comes after months of negotiations, highlights the pharmaceutical industry's increasing focus on FGF21 class therapeutics and their potential in addressing liver diseases.

Akero's Success Sparks Industry Interest

The catalyst for this acquisition can be traced back to Akero Therapeutics' success with efruxifermin, their liver disease drug. In January, Akero reported that efruxifermin reduced liver fibrosis by 24% compared to placebo in the mid-stage SYMMETRY trial. This breakthrough "heightened industry focus on the FGF21 class of therapeutics," according to regulatory documents, and caught the attention of several pharmaceutical companies, including Roche.

Negotiation Timeline and Strategy

The path to acquisition was not straightforward, with negotiations spanning several months:

• Early interactions: Roche and 89bio had been in communication for several years, with as many as six companies closely watching 89bio's progress.
• March 2023: Roche initially proposed a licensing deal for pegozafermin, 89bio's FGF21 analog for MASH.
• June 2023: 89bio suggested a full buyout would be preferred over a collaboration agreement.
• July 2023: Roche offered $13 per share, which was rejected by 89bio CEO Rohan Palekar.
• Late August 2023: After multiple rounds of negotiations, Roche presented its "best and final" offer.
• September 18, 2023: The $3.5 billion acquisition was officially announced.

Deal Structure and Value

The final agreement includes:

• $14.50 per share in cash upfront
• Contingent Value Rights (CVRs) totaling up to $6:
  • $2 upon the first sale of pegozafermin by March 31, 2030
  • $1.50 upon achieving $3 billion in annual global sales by December 31, 2033
  • $2.50 upon reaching $4 billion in sales by December 31, 2035

This structure brings the total potential value to $20.50 per share, meeting 89bio's board's goal of a deal valued at about $20 per share.