Bayer acquires women’s health company Kandy for $875m

Bayer has struck an $875m deal to acquire British women’s health biotech Kandy Therapeutics, bolstering its pharmaceuticals division before patents expire on some key products.

The German drug and chemical company agreed to pay $425m upfront and potential milestone payments of $450m until the launch of Kandy’s experimental treatment for menopause symptoms.

Kandy’s drug NT-814 was expected to start a final-stage clinical trial in 2021 and could generate peak sales of €1bn globally, Bayer said in a statement on Tuesday.

Bayer’s share price rose as much as 1.8% in Frankfurt.

With blockbuster blood thinner Xarelto and eye-care medicine Eylea losing patent protection in the next few years, Bayer’s pharmaceutical division has been looking for small-scale deals to boost earnings.

The Germany-based firm has lacked major firepower for acquisitions after spending $63bn in 2018 on agriculture giant Monsanto — a deal that brought a host of legal headaches that Bayer is also trying to put behind it.

Last August, Bayer’s pharma unit agreed to pay as much as $600m to buy the remainder of cell therapy biotech BlueRock Therapeutics.

At the time, Stefan Oelrich, Bayer’s head of pharma, said that the best value-creating deals in the industry in recent years had targeted early-stage companies with products that wound up becoming blockbusters.

While the Kandy deal was a “good start”, Bayer will need more such moves to make up for the coming loss in revenue from Xarelto and Eylea, which, together, accounted for €6.6bn in sales in 2019, Michael Shah, an analyst with Bloomberg Intelligence, said in a note.

Bayer’s late-stage product pipeline only had a peak sales potential of €3.8bn, though the Kandy deal could increase that by €1bn, Shah said.

Along with cardiology and oncology, Bayer has long been active in women’s health, marketing products in contraception and gynaecological diseases.

Last week, the company said it was in talks to resolve thousands of lawsuits that claim its Essure contraception device had failed to prevent pregnancy or injured women.

Bayer acquired it when it bought medical-device maker Conceptus for $1.1bn in 2013; Essure was pulled from the market in 2018.

Once Kandy’s drug comes to market, Bayer could make additional sales milestone payments that exceed $100m, the company said.

The deal is expected to close in September.