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French pharma group Ipsen closes in on its next drug deals

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By Ben Hirschler

LONDON (Reuters) – French drugmaker Ipsen <IPN.PA> plans to bring in multiple new medicines through a series of transactions and sees the recent price drop of biotech stocks as increasing deal opportunities, its chief executive said on Wednesday.

“We’re more active than ever. We’ve got the financial capacity to do transactions and the board is motivated to do transactions,” David Meek told Reuters during a visit to London.

Under Meek, an American who took over as CEO in July 2016, the 89-year-old French drug company has become more international, with a sharply increased focus on the United States, the world’s biggest and most profitable drugs market.

Now investors are waiting for him to strengthen the portfolio further with new licensing deals that can help offset the long-term generic threat to its top-selling cancer treatment Somatuline.

Meek said he was comfortable with gearing up the company to “at least” two times net debt to EBITDA, and potentially more for the right deal, suggesting firepower for transactions of more than 1 billion euros ($1.1 billion).

The company has set up parallel business development teams scouting for promising assets in oncology, rare diseases and neuroscience — its core areas — and Meek said he would not blow all the company’s war chest on a single deal.

“Don’t expect us to go out and do a one-time transaction for 2 billion — that’s not our strategic intent. It’s more aiming for four mid-sized deals,” he said.

Many large drug companies — also actively shopping for experimental drugs from biotech companies in recent years — have complained about high market valuations, which have made transactions hard to justify.

But Meek said Ipsen’s relatively small size was an advantage since it could look at drugs with peak annual sales potential of a few hundred million dollars that would be below the radar of larger players.

Together with the recent market correction, which has made assets more affordable and increased the pressure on some biotech firms to seek new funding sources, Meek believes this should help him find product acquisitions with decent returns.

“Prices up until recently have been pretty high. We have now had an adjustment and I think that is good for us because we have the cash we can deploy,” he said.

(Reporting by Ben Hirschler)

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