Israeli pharmaceutical major Teva has announced plans to acquire Auspex (US), a developer of novel treatments targeting movement disorders, in a deal worth USD3.5 billion.
IHS Life Sciences perspective | |
Significance | Teva (Israel) plans to acquire US firm Auspex in a deal worth USD3.5 billion (in 'equity value'). The deal is expected to close in mid-2015, subject to certain conditions being met. The boards of both companies and leading shareholders have approved the acquisition and merger. |
Implications | Auspex is a developer of therapies targeting movement disorders. Auspex's lead pipeline product is SD-809, which targets chorea in several movement disorders and has completed Phase III clinical trials. |
Outlook | The planned acquisition aligns with with Teva's strategy of purchasing companies that fit within its existing competencies in CNS and respiratory indications. The proposed acquisition suggests that Teva is more open to M&A activity after a hiatus as part of cost-saving drives. |
Israel-headquartered Teva Pharmaceuticals has announced plans to acquire US company Auspex Pharmaceuticals. Teva has offered USD101.00 per share for Auspex, equating to USD3.2 billion in 'enterprise value' terms and USD3.5 billion in 'equity value' terms. Following the acquisition, Teva plans to merge its operations with Auspex's. The deal is expected to close in mid-2015, pending a number of conditions laid down by competition laws. Teva notes that the deal has the approval of key shareholders and the boards of both companies. A copy of Teva's press release detailing the acquisition can be accessed here.
Auspex is a biopharmaceutical company specialising in the development of drugs targeting movement disorders. Auspex's lead product is SD-809 (deutetrabenazine), an experimental treatment that utilises Auspex's deuterium technology platform. SD-809 is in the process of development for the treatment of chorea (involuntary movements) in patients with Huntington's disease, tardive dyskinesia, and Tourette's syndrome. In December 2014, Auspex announced positive results from a Phase III trial examining SD-809 in the treatment of Huntington's disease. Based on these results, the company announced plans to file for regulatory approval of the treatment in the United States by mid-2015 (see United States: 17 December 2014: Auspex Pharmaceuticals' SD-809 meets primary endpoint in Phase III Huntington's disease study). Auspex's pipeline also includes a deuterium-containing pirfenidone analog known as SD-560. This candidate is currently undergoing Phase I clinical trials to examine the safety and tolerability of SD-560 against pirfenidone, targeting the indication of idiopathic pulmonary fibrosis. Teva also notes that Auspex's pipeline includes a deuterated version of levodopa, targeting Parkinson's disease, and a further 60 candidate molecules targeting unknown indications.
Outlook and implications
The planned acquisition of Auspex should provide Teva with access to an exciting potential product. Indeed, Teva has suggested that it anticipates the approval and launch of SD-809 in 2016. The timing of anticipated market entry for SD-809 is significant, as there remains uncertainty over the potential for generic or innovative products competition to Copaxone in the near term (see Israel: 12 December 2014: Copaxone generic competition in US dents Teva Pharmaceutical's 2015 revenue forecasts).
The launch of SD-809 would probably be assisted by Teva's strong presence in the CNS space. Teva's three key CNS products include the multiple sclerosis treatment Copaxone (glatiramer acetate), the Parkinson's disease treatment Azilect (rasagiline), and the sleep apnea/narcolepsy treatment Nuvigil (armodafinil). Teva's CNS portolio represented 27.5% of the company's revenues in 2014 (see Israel: 6 February 2015: Teva's revenues remain flat in 2014).
The acquisition is also significant because Teva had undertaken a period of cost saving aimed at offsetting near-flat revenue growth and the already discussed potential for competition to its Copaxone product. This process of cost saving has involved Teva reducing its mergers and acquisitions (M&A) activities, ceasing development of its oncology and women's health products, and shedding 5,000 jobs (see Israel: 8 October 2014: Teva ceases development of oncology and women's health products in USD550-mil. cost-saving drive and World - Israel: 11 October 2013: Teva cuts 5,000 jobs in USD2-bil. cost-saving drive). With Teva now re-engaging in M&A activity, it is noteworthy that Auspex fits with Teva's current strategy of acquiring companies closely allied to its goals of growing its CNS and respiratory portfolios.