Otsuka announced Tuesday a definitive agreement to acquire Avanir Pharmaceuticals for $17.00 per share in cash, or approximately $3.5 billion, expanding its presence in neurologic diseases. The transaction, which has been unanimously approved by the boards of both companies and represents a 13-percent premium to Avanir’s closing share price on December 1, is expected to complete in the first quarter of 2015.
Taro Iwamoto, president of Otsuka Pharmaceutical, remarked “as we bring together Otsuka’s experience and business track record in the area of mental illnesses with Avanir’s strengths in neurologic diseases, we believe that we can evolve into a truly global CNS pharmaceutical company.” The drugmakers noted that following closing of the deal, Avanir will operate under its current structure as an independent subsidiary of Otsuka.
According to Otsuka, the acquisition will “accelerate” its expansion strategy in the neurologic area, giving it access to Avanir’s Nuedexta (dextromethorphan/quinidine), which is approved in the US and Europefor pseudobulbar affect, and the late-stage compound AVP-786, which is under development to treat agitation associated with Alzheimer’s disease. Otsuka noted that sales of Nuedexta in the 12-month period ended June this year were $94 million, a 50 percent increase over the prior-year period.
Last month, the FDA issued a complete response letter regarding Avanir’s filing seeking approval of AVP-825, which consists of low-dose sumatriptan powder delivered intranasally utilising a breath powered delivery technology, for the treatment of migraine. The company’s pipeline also includes programmes in Alzheimer’s disease, Parkinson’s disease and other CNS indications.
Commenting on the news, SMBC Nikko Securities analyst Yasuhiro Nakazawa said that Nuedexta and AVP-786 “are unique, exciting and fit with Otsuka,” adding “they will help Otsuka have sustainable growth after Abilify.” Otsuka is looking to new products to offset lost revenue from the upcoming patent expiry on Abilify in 2015. The schizophrenia therapy posted sales of 575.7 billion yen ($4.8 billion) in the last fiscal year, with the US representing the largest market for the product.
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