PHARMA DEALS DURING NOVEMBER 2014
(Part 1 out of 3)
by Bridget Lacey
After the surprise of AbbVie walking away from its deal with Shire in October, last month we had the excitement of Actavis beating off Valeant to buy Allergan for a whopping $66bn. There are also another eight deals with headline values over $1bn as companies look to reshape, divest, focus and consolidate. We have also seen a couple of deals continuing the trend of acquisition of royalty streams and priority review vouchers. By far the most common therapeutic area this month has been oncology with five deals in our top 20.
The wait is over
At $219 per share Actavis is paying a 88% share premium over the price of Allergan's shares on April 10 this year (the last date before Valeant's ally Pershing Square crossed the 5% threshold which kicked-off Valeant's seven month pursuit of Allergan). The $66bn was believed to be a step too far for Valeant as CEO J Michael Pearson said he “couldn't justify” the $66bn price tag – representing over a 20% uplift to his last offer of $54bn.
Allergan held out for its white knight with the commitment that the combined company will spend $1.7bn in R&D investment (~7.3% of the $23bn in combined revenues for 2015). This is less than the 20% seen in other parts of the industry, but not so unreasonable as half of the combined company's sales will be in generics. This is considerably higher than the R&D-averse Valeant's 3%.
In terms of running costs, Actavis is looking at a $1.8bn in savings, with the majority realised in the first year after closing. This is much less than the $2.7bn in annual costs targeted by Valeant (with 80% of that squeezed within the first six months). Actavis' target includes about $450m in financial synergies in addition to the $475m cuts that Allergan announced in July; a move that was designed to fend off Valeant.
Back in the game
Not quite at the same eye watering level of bid premium, BioMarin has stepped in to buy Prosens for $680m in cash while offering up to an additional $160m more in near-term milestones if drisapersen, the late-stage drug for Duchenne muscular dystrophy (DMD), secures “early” approval. Early is defined as a US approval by May 15 2016 and a European approval no later than February 15 2017.
BioMarin is paying $17.75 per share, which represents a 55% bid premium, and in the weeks following the announcement of the deal, Prosensa's price rose to a high of $20.31 before settling at around $19.00. Prosensa has been busy since drisapersen failed a pivotal phase III for DMD (failure to beat a placebo in significantly improving boys' ability to complete a six-minute walk test) and the rights were returned by GlaxoSmithKline in January 2014. It undertook fresh analysis of new extension study data that backed a hypothesis that providing the drug earlier while extending treatment could delay disease progression. Following "positive" reviews with the FDA Prosensa has just begun a rolling submission of the application. BioMarin clearly feels that there is still a real opportunity and is prepared to take on Sarepta and PTC Therapeutics in the competition to hustle ahead new DMD drugs to regulators.
Plenty more fish in the sea
While Valeant is busy licking its wounds - including organising a $2bn share buy-back, it's also understood to be eyeing other prey in the form of Zoetis who this month acquired Abbott's animal health business for $255m. Bill Ackman, a Valeant investor, now owns 8.5% of Zoetis, which may pave the way for a potential deal. However, once again Valeant may face some hurdles as Zoetis has adopted a poison pill defence and Bayer is also understood to have Zoetis in its sights. Bayer may need to complete its rumoured sale of its diabetes device business unit first. It's understood that a number of PE firms are set to acquire the diabetes portfolio, which includes Contour (the blood glucose meter) for $2.5bn. This would enable Bayer to continue to focus on strategic areas such as consumer health, which has already been bolstered by the acquisition of Merck & Co's consumer business in May for $14bn.
Bayer is not the only company targeting OTC; Perrigo announced the acquisition of the Belgian OTC company Omega Pharmaceuticals with its 2,000 product portfolio for $4.5bn. This follows Perrigo's acquisition of Elan in July last year for $8.6bn. Perrigo will fund 25% through equity to Omega's CEO Mark Coucke and cover the rest with cash and debt, taking on €1.1m of Omega's debt.
Divesting assets
November has seen a series of other companies who are understood to be shedding non-core businesses:
- Reckitt Benckiser (RB) is spinning out its pharma business unit, under the name Indivior. Analysts' valuations for the drug unit have ranged widely from £1bn and £4bn; recent estimates suggest the business is worth around £2bn ($3.2bn). RB investors will each receive one share in Indivior for each RB share they own, with trading in its shares scheduled for December 23. Indivior will not be without its challenges as sales of its off-patent opioid addiction treatment Suboxone continue to slump.
- Similarly UCB is understood to be selling its highly profitable generics business Kremers Urban Pharmaceuticals to Advent International and Avista Capital Partners for $1.53bn to allow it to focus on neurology and immunology and reduce debt load.
Fuente: PMLiVE
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