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King Must Sell Drug Assets to Buy Alpharma

By Marley Seaman

BRISTOL, Tenn. -- King Pharmaceuticals (KG)said Friday it will be allowed to buy Alpharma (ALO)provided it sells some assets related to Alpharma's painkiller Kadian.

King said the Federal Trade Commission has ended a required waiting period for King's buyout of Alpharma and is provisionally accepting a consent order for public comment. After three months of public wrangling, Alpharma accepted a buyout offer worth $1.6 billion, or $37 per share, from King in November.

King's tender offer for Bridgewater, N.J.-based Alpharma is expected to end at 10 a.m. Monday, and more than 92% of Alpharma shares have been tendered in favor of the deal.

Kadian is an extended-release morphine-based pain drug, and in 2007, it was Alpharma's best-seller, bringing in $167.7 million in revenue. King is developing its own extended-release painkiller, called Remoxy, with Pain Therapeutics. Remoxy is a form of oxycodone, an opioid marketed as OxyContin, that is designed to be abuse-resistant.

King gets about half its revenue from sales of painkillers, but its muscle relaxant Skelaxin will face generic competition in 2012, and analysts say the patents supporting the drug could be overturned as early as 2009. The company lost patent protection on its blood pressure drug Altace in 2007, and its surgical blood-clotting product Thrombin-JMI is also facing patent threats.

Alpharma also makes the Flector pain patch, which it began selling in January.

The patents behind Kadian are scheduled to expire in spring 2010. Cowen and Co. analyst Ian Sanderson said the FTC's ruling is "a positive outcome for King" because the company won't have to sell off a more valuable product or drug candidate.

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