Halozyme abandons its €2bn pursuit of Evotec

US biotech Halozyme Therapeutics has withdrawn its offer to acquire Evotec, saying that the German company had been "unwilling to engage with us to explore a potential combination."

Halozyme made the €11-per-share offer earlier this month, valuing Evotec at around €2 billion ($2.1 billion), saying at the time that combining its drug delivery technology business with Evotec's portfolio of drug discovery and development services would make a powerful combination.

According to Halozyme's chief executive, Helen Torley, joining the two businesses would "diversify and extend Halozyme revenue and [earnings] growth and durability well into the next decade and beyond."

It seems Evotec's management was not on board with that notion, however, and said publicly the company's strategy is to remain independent, whilst promising to "carefully analyse" the proposal.

Halozyme has now admitted defeat, saying that "multiple requests" to meet with Evotec's chair, Iris Löw-Friedrich, were not accepted, although it has alluded to "informal discussions" with another member of the Hamburg-based company's board.

In an update to investors, Evotec acknowledged the withdrawal of the offer and said its board continues to have "strong conviction in the company's standalone strategy, which is expected to accelerate growth, strengthen the long-term profitability of the company, and deliver significant value to shareholders."

The offer came after a difficult period for Evotec, with falling revenues resulting from a weaker contract research organisation (CRO) market, leading to a near-60% decline in its share price since the start of the year. That prompted the company to embark on a restructuring drive – dubbed 'Priority Reset' – which has resulted in staff layoffs, an exit from the gene therapy category, and the sale of a chemical active pharmaceutical ingredient (API) manufacturing facility.

Revenues at the group fell 1% in the first nine months of this year to €576 million, while revenues from R&D collaborations from partners like Bristol-Myers Squibb were down 12% to €447 million. The company is trying to reduce its costs by €40 million a year with the business revamp and is still predicting an increase in full-year revenues from €781 million last year to €790-€820 million.

The weakness in its share price has resulted in private equity group Triton building a stake in Evotec, amid speculation that it is also considering a takeover bid.

Halozyme is best known for its hyaluronidase technology platform used to create subcutaneous formulations of biologic medicines currently delivered by infusion – including new versions of Opdivo (nivolumab) and Roche's Tecentriq (atezolizumab) – but is seeing competition from newer players like Alteogen.

Shares in Evotec fell by around 18% after Halozyme's latest announcement, before staging a partial recovery, while Halozyme also climbed 7%.