Investing.com -- Recordati 's (BIT:RECI) shares jumped on Friday following its deal with Sanofi (NASDAQ:SNY) to buy the global rights to Enjaymo (sutimlimab), a first-in-class biologic for the treatment of cold agglutinin disease.
At 5:08 am (0908 GMT), Recordati was trading 5.7% higher at €52.30.
This transaction marks a step in Recordati's expansion into rare diseases, further strengthening its portfolio in the specialty pharmaceuticals space.
Enjaymo® is the only approved targeted treatment for CAD, a rare and chronic autoimmune condition in which the immune system mistakenly attacks red blood cells, causing hemolysis.
Approved by regulatory authorities in the U.S., Europe, and Japan, this monoclonal antibody addresses a critical unmet need in the management of CAD.
Since its FDA approval in 2022, Enjaymo has been a vital option for patients, reducing the risk of life-threatening complications associated with the disease.
“Enjaymo generated approximately €100 million in revenue over the last 12 months as of August 2024 and is expected to generate revenue in excess of €150 million in FY 2025, with peak sales potential of € 250-300 million, more than double current levels,” the company said in a statement.
Such projections highlight the upside potential for Recordati, more than doubling current revenue levels for the product.
“At 2.3-3.0x peak sales we think the deal value looks reasonable,” said analysts at RBC Capital Markets in a note.
The company anticipates that the transaction will be accretive to earnings before interest, taxes, depreciation, and amortization (EBITDA) as early as 2025, contributing margins above Recordati's current average for rare disease products.
Under the terms of the agreement, Recordati will make an upfront payment of $825 million, with potential additional milestone payments of up to $250 million, contingent on Enjaymo's net sales performance reaching certain thresholds.
The deal is expected to close by the end of 2024, pending regulatory approvals.
“Enjaymo will be a sensible addition to the franchise in our view, notably adding to the US footprint,” the analysts said.
To fund the acquisition, Recordati will utilize both existing cash reserves and new bank debt facilities, with the company's net debt expected to stand at 2.4-2.5x EBITDA by the end of 2024.