Allergan plc (AGN) is poised to shift its attention to accretive M&A and away from the early-stage pipeline acquisitions that many investors have been highly critical of over the last several months, management indicated at a breakout session Monday afternoon after CEO Brent Saunders presented at the 35th Annual J.P. Morgan Healthcare Conference.
That's likely to please investors who are after a capital allocation strategy that involves a more immediate return on their capital. Shares of the company have suffered in recent months while Allergan, a holding of the Action Alerts Plus portfolio, managed by TheStreet's founder Jim Cramer, has scooped up numerous R&D stage assets as part of it so-called "stepping stone" strategy. The company's tuck-in M&A initiative got underway in August, after completing the sale of its generic drug business to Teva Pharmaceutical Industries Ltd. (TEVA) for $33.4 billion in cash and $5.4 billion in Teva stock.
Saunders on Monday called its strategy an "investment in growth" and added that the drugmaker's goal is "to have a very strong balance between R&D deals and accretive deals."
Among its most recent of purchases, Allergan on Dec. 20 announced plans to purchase regenerative medicine company LifeCell Corp. for $2.9 billion in cash from privately-held Acelity LP Inc.
Other notable deals include its its $639 million buyout of Vitae Pharmaceuticals Inc. (VTAE) , a clinical stage biotech developing therapy to treat moderate-to-severe psoriasis, a common skin condition, and mild-to-moderate atopic dermatitis.
The company also drew criticism for the nearly 500% upfront premium it paid in its deal for Tobira Therapeutics Inc. (TBRA) , though some analysts have since contended investors had overreacted. In the deal for the liver disease-focused biopharma company, Allergan has agreed to pay about $595 million upfront plus a potential additional consideration that could ultimately add up to $1.1 billion.
Saunders, meanwhile, spent more of his time describing to investors on Monday how the drugmaker's pipeline of products set it up for years of growth.
Allergan's "6 stars"—its six therapies currently in phase three development in 2017—have the potential to generate peak sales of up to $13 billion, he noted.
Those six therapies are Esmya, Abicipar, Cenicriviroc (CVC), Ubrogepant Atogepant, Rapastinel and Relamorelin.
Saunders described Rapastinel, which is under development for the rapid onset action for the treatment of depression, as one of his "personal favorites." The company expects Rapastinel to launch in 2021 with $1 billion to $2 billion in peak sales.
Allergan's 11 new product launches in 2016 and 2017 ought to generate about $5 billion in peak sales, the company anticipates.
Saunders went on to describe Allergan as a "sustainable" and "long-term growth company" for reasons including its low exposure to U.S. price pressure. More specifically, about 40% of the company's top line on a global basis is not exposed to U.S. drug pricing risk, about 20% of which is reimbursed via cash pay. He also added that is portfolio of key therapies have an exclusivity period lasting well into the next decade.
Looking back at 2016, Saunders' called it a year of "tremendous transformation," going so far as to say that no other biopharma or pharma company has experienced the amount of change even over a 10-year period that Allergan has in the last 12 months.
—Adam Feuerstein contributed to this report
Editor's pick: The article was originally published on Jan. 10 at 9:46 am ET