AstraZeneca to buy Fort Worth startup ZS Pharma for $2.7 billion

ZS Pharma, a biotech firm that was launched out of the Tech Fort Worth business incubator, has agreed to be acquired by AstraZeneca Plc for $2.7 billion in cash.

ZS Pharma investors will get $90 per share, London-based AstraZeneca said in a statement. That’s a 42 percent premium to Thursday’s close. The board of San Mateo, California-based ZS Pharma agreed to the transaction.

The deal would give the U.K.’s second-largest drugmaker ZS Pharma’s ZS-9, a medicine with high sales potential at a time when its own blockbusters, such as the Nexium antacid and the heart drug Crestor, reach the end of their patent-protected life. Actelion in September said it had held talks with the U.S. company, which has no revenue yet but whose product has passed all three levels of clinical tests.

Last decade, ZS Pharma’s founder Al Guillem worked for Adams Laboratories in Fort Worth, which developed the over-the-counter medication Mucinex. He left town after it was sold but returned to Fort Worth after creating ZS Pharma in 2008 and located at Tech Fort Worth, where he worked with its executive director Darlene Boudreaux, another veteran of the drug industry.

The company did initial lab work at the University of North Texas Health Science Center, and also received funding from the state’s Emerging Technology Fund in 2010.

In 2013, ZS moved out of Tech Fort Worth and set up shop in Coppell. Last year, the company raised $100 million in a public stock offering, becoming the first IPO for a Texas biotech startup in more than a decade.

ZS has established its manufacturing operation in Coppell, with more than 80 employees. But earlier this year, it shifted its corporate headquarters to northern California after Robert Alexander, a former executive with the venture capital firm Alta Partners, took over as CEO.

The experimental treatment ZS-9, for a life-threatening condition called hyperkalemia, was submitted to the U.S. Food and Drug Administration in May and will be filed to European regulators by the end of the year. Sales may exceed $1 billion, according to AstraZeneca.

ZS Pharma and its 200 employees will become a wholly owned subsidiary of AstraZeneca after the transaction. The deal will generate sales from next year and contribute to a profit measure AstraZeneca calls core earnings from 2018. There will be “minimal earnings dilution” in 2016 and 2017, the company said.

Hyperkalemia is a condition in which there’s too much potassium in the blood, which can lead to chronic heart failure or chronic kidney disease. AstraZeneca has a medicine in advanced tests that targets anemia associated with chronic kidney disease, called roxadustat.

“This acquisition complements our strategic focus on cardiovascular and metabolic disease by adding a potential best- in-class treatment to our portfolio of innovative medicines,” AstraZeneca Chief Executive Officer Pascal Soriot said in the statement.

The transaction is expected to close by the end of the year. The companies didn’t disclose their advisers.

This story was originally published November 6, 2015 at 9:36 AM with the headline "AstraZeneca to buy Fort Worth startup ZS Pharma for $2.7 billion."