Japan's Otsuka Pharmaceutical Co. Ltd. on Tuesday, Dec. 2, once again went shopping in the U.S., hoping to pad its pipeline with Avanir Pharmaceuticals Inc.'s neurological treatments to offset the loss of a key patent.
Tokyo-based Otsuka said it had agreed to pay $17.00 per Avanir share, a 13% premium to the target's $15 closing price on Nasdaq on Monday, and valuing the Aliso Viejo, Calif. company at $3.5 billion.
"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," said Otsuka President Taro Iwamoto in a statement.
Just over a year ago Otsuka closed its $940 million acquisition of Dublin, Calif.-based Astex Pharmaceuticals Inc. to tap the target's oncology drug discovery business. Otsuka will lose patent coverage on its Abilify antipsychotic treatment next year. The drug brings in $4.5 billion annually and Otsuka needs new drugs to plug the hole.
Avanir sales nearly doubled last year to $75.4 million as sales of its Nuedexta treatment increased. However, the company remained unprofitable with $71.4 million in operating losses. Nuedexta was approved by the FDA in 2010 and is used to treat a type of uncontrollable laughing or crying linked to other neurological disorders.
The target also has a potential treatment for agitation related to Alzheimer's that's already in advanced stages of testing and it also offers drugs for migraines and Parkinson's Disease. It employs 485.