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The M&A roundup
August 2015
by Jeffrey Bouley  |  Email the author
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We’ve reached another of those times when there is too much merger and acquisition news to devote individual news stories to each deal in the magazine. In fact, there’s even some late-breaking news that couldn’t quite be shoehorned into our cover article related to Allergan plc, giving it a little extra attention. Let’s go ahead and get started there.
 
Allergan to acquire Naurex
 
DUBLIN—Global pharma Allergan and Naurex Inc., an Evanston, Ill.-based clinical-stage biopharmaceutical company focused on disorders of the central nervous system, announced in late July that they have entered into a definitive agreement under which Allergan will acquire Naurex in an all-cash transaction. Under the terms of the agreement, Allergan will acquire Naurex for a $560-million upfront payment net of cash acquired, $460 million of which is payable upon the closing of the acquisition and $100 million of which is payable by January of 2016 (or upon the closing if the closing has not occurred by such time), as well as potential R&D success-based and sales-threshold milestone payments.
 
The acquisition is expected to strengthen Allergan’s long-term growth profile with the addition of Naurex’s lead development product rapastinel (GLYX-13), a once-weekly intravenous Phase 3-ready molecule that has reportedly demonstrated rapid, robust and sustained efficacy in multiple Phase 2 clinical studies in depression. The acquisition will also add Naurex’s development product NRX-1074, a next-generation drug candidate, the intravenous form of which is said to have shown rapid and robust antidepressant efficacy in an initial single-dose Phase 2 study. NRX-1074 is also an orally bioavailable drug candidate which is in Phase 1 studies. Rapastinel and NRX-1074 are both targeted modulators of the N-methyl-D-aspartate (NMDA) receptor. Both therapies have been found to be well tolerated in all studies to date, with no drug-related serious adverse events or any of the dissociative side effects typically seen with NMDA antagonists.
 
“The acquisition of Naurex is a great fit for Allergan and a compelling and exciting investment. We expect Naurex will enhance Allergan’s mental health portfolio and build on our strategy to lead in this important therapeutic area,” said Brent Saunders, CEO and president of Allergan. “Naurex’s unique pipeline comprises compounds that utilize a new mechanism to target areas of significant unmet medical need in Major Depressive Disorder, including severe and/or treatment-resistant depression. These highly differentiated compounds will immediately bolster our exceptional mental health pipeline.”
 
A $7.2-billion price tag for Receptos
 
SUMMIT, N.J. & SAN DIEGO—In a deal struck July 14, Celgene Corp. and Receptos Inc. announced a definitive agreement under which Celgene has agreed to acquire Receptos for $232 per share in cash, or a total of approximately $7.2 billion. The acquisition “significantly enhances” Celgene’s inflammation and immunology (I&I) work, the acquiring company notes, and further diversifies the company’s revenue beginning in 2019 and beyond, building upon Celgene’s growing expertise in inflammatory bowel disease (IBD).
 
The transaction adds Ozanimod, a novel, potential best-in-class, oral, once-daily, selective sphingosine 1-phosphate 1 and 5 receptor modulator (S1P) to Celgene’s “deep and diverse pipeline of potential disease-altering medicines and investigational compounds.” Based on clinical studies, Ozanimod demonstrated several areas of potential advantage over existing oral therapies for the treatment of ulcerative colitis and relapsing multiple sclerosis, including its cardiac, hepatotoxicity and lymphocyte recovery profile. Also, Ozanimod is positioned to potentially become the first S1P receptor modulator to be approved for IBD.
 
“The Receptos acquisition provides a transformational opportunity for Celgene to impact multiple therapeutic areas,” said Bob Hugin, chairman and CEO of Celgene. “This acquisition enhances our I&I portfolio and allows us to leverage the investments made in our global organization to accelerate our growth in the medium and long term.”
 
 “Ozanimod is a potentially transformational oral therapy that has demonstrated robust clinical activity with impressive immune-inflammatory modulating properties in Phase 2 trials,” said Scott Smith, president of I&I for Celgene. “Ozanimod is a highly differentiated next-generation S1P receptor modulator with important efficacy and safety features that create the opportunity for development across a spectrum of immune-inflammatory diseases.”
 
Celgene’s I&I portfolio is currently anchored by the successful global launch of Otezla (apremilast) in psoriasis and psoriatic arthritis. Celgene’s I&I pipeline will, upon completion of the M&A transaction, consist of three high-potential commercialized or late-stage assets: Otezla, GED-0301 and Ozanimod. All three candidates are in Phase 3 development and encompass four indications: Behçet’s disease, Crohn’s disease, ulcerative colitis and relapsing multiple sclerosis. The pipeline also includes seven molecules in Phase 2 development in a variety of indications, including RPC4046 for eosinophilic esophagitis and a growing number of Phase 1 and preclinical assets.
 
Integra to pay over $300M for a pair of TEIs
 
PLAINSBORO, N.J.—Integra LifeSciences Holdings Corp. and Waltham, Mass.-based TEI Biosciences Inc. and TEI Medical Inc. announced in late June a definitive agreement under which Integra will acquire all of the outstanding shares of TEI Biosciences and TEI Medical for $312 million cash at closing. The companies expect to complete this transaction during the third quarter of 2015, subject to customary closing conditions.
 
Peter Arduini, Integra’s president and CEO, stated, “This acquisition broadens our presence in regenerative wound care and tissue repair and represents a significant push forward toward our growth objectives for 2015 and beyond. The addition of TEI is an important, strategic next step for both our channel and international expansion priorities. We are enthusiastic about both TEI’s product development and commercial expertise, which accelerates our ability to establish an immediate presence in the diabetic foot ulcer space.”
 
“It is an exciting time for TEI, and I am confident in Integra’s ability to grow our leading platform technology to drive broader expansion into regenerative medicine including wound care, plastic and reconstructive surgery and other soft tissue repair and reconstruction applications,” added Dr. Yiannis Monovoukas, chairman, president and CEO of TEI.
 
TEI generated revenues of approximately $63.5 million (unaudited) in 2014. Gross margin was about 80 percent, which is comparable to Integra’s regenerative technology product portfolio, and EBITDA margin was about 25 percent. Preliminarily, Integra expects the acquired revenue to increase by high single digits in the first full year after closing.
 
Chiral Technologies acquires Diffinity Genomics
 
WEST CHESTER, Pa.—Early August saw Chiral Technologies, part of Daicel Corp., a provider of enantioselective chromatography, announce the acquisition of the assets of Diffinity Genomics of West Henrietta, N.Y. Diffinity Genomics has developed novel technology for the purification of nucleic acids, which formed the foundation for their products in DNA purification markets. The Diffinity RapidTip technology provides a method for rapid purification of amplified DNA fragments from polymerase chain reaction in a single step.
 
“The innovative, patented purification technology from Diffinity was a perfect choice for our expansion in the bio-separation/purification marketspace,” commented Dr. Joseph Barendt, chief operating officer of Chiral Technologies.
 
Dr. Joseph Marasco, CEO of Diffinity Genomics, stated: “We are very pleased to become part of Chiral Technologies. We are confident that this is an ideal fit with Chiral Technologies as a multinational development partner to commercialize Diffinity’s unique technologies.” Upon the successful completion of the acquisition, Marasco will leave Diffinity Genomics to pursue other interests.
 
Is Pfizer out to nab Cellectis?
 
NEW YORK—Since late May, the rumor mill has been whispering that French biotech Cellectis has a desire to sell and that Pfizer is already in talks with the company to buy, with an eye toward getting deeper into the immuno-oncology market. The Financial Times broke the story, citing an unnamed pair of sources “close to the situation.” The offer is said to be as high as €1.5 billion, or about $1.6 billion in U.S. currency.
 
The deal wouldn’t be surprising if it actually happens, given that Pfizer signed a big deal with Cellectis last year for access to some of the French company’s chimeric antigen receptor T cell (CAR-T) assets. Pfizer bought itself roughly a 10-percent stake in Cellectis as part of that deal. Cellectis stands to collect as much as $185 million in milestone payments for each successful CAR-T candidate, valuing that deal at as much as $2.8 billion, potentially. Market-watchers think that Pfizer might be willing to pony up big money to catch up with rivals in the immuno-oncology space.
 
Hostile behavior with Horizon and Depomed
 
DUBLIN—Meanwhile, amidst the actual signed deals and the rumored one we just addressed, Horizon Pharma has been keen to acquire Depomed Inc., but the latter has been playing hard to get. The situation started in May with Horizon’s first overture, which Depomed rejected, prompting Horizon to go into hostile takeover mode in July. Depomed rejected a revised offer in mid-July and yet another bid July 29, saying that the offer is “inadequate” and undervalues the company.
 
Among the assets Depomed would offer are five pain treatments, one of which is its flagship product Nucynta. For its part, in addition to treatments for genetic disorders related to immunity and metabolism, Horizon has four of its own pain treatments on the market.
 
Code: E081525

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