Health Care Deal News: Spotlight on Pharmaceuticals-Dec. 11

Medicis Pharmaceutical Corp. (NYSE: MRX) is paying $455.0 million to acquire Graceway Pharmaceuticals out of bankruptcy. Based in Bristol, Tennessee, Graceway has a product portfolio of prescription products in dermatology, respiratory and women’s health. The portfolio includes products on the market and in development. The marketed products generate annual revenue of about $125.0 million, so the price to revenue multiple is 3.6x. With this deal, MRX is expanding its dermatology franchise, and adding respiratory and women’s health to its therapeutic areas. Additionally, it gains access to three drug candidates in phase 2 and 3 trials, whose combined peak annual revenue could be as high as $500.0 million.

Salix Pharmaceuticals (NASDAQ: SLXP) is paying $300.0 million in cash to buy Oceana Therapeutics. Based in Edison, New Jersey, Oceana is a provider of gastroenterology and urology therapeutics. The company offers treatments for fecal incontinence and vesicoureteral reflux. This acquisition expands SLXP’s product portfolio and diversifies its sources of revenue. Sales of Oceana’s Solesta treatment for fecal incontinence, it is believed, could reach over $500.0 million as the number of the elderly continues to increase. Wells Fargo Securities and Jefferies & Co. provided SLXP and Oceana Therapeutics, LLC, respectively, with financial advice on this deal.

Meda AB (STO: MEDAA) continues to enlarge its generic drugs portfolio. In its fifth deal of 2011, it is acquiring three OTC drugs from Johnson & Johnson’s McNeil AB/Cilag GmbH International unit for  €82.0 million ($110.0 million). The best known of the three is Treo; together, the three drugs generate annual revenue of about $31.0 million. With this acquisition, valued at 3.6x revenue, Meda becomes the largest company with OTC pharmaceuticals in Sweden.

Switzerland’s Spirig Pharma AG is selling its generic pharma operations to Stada Arzneimittel (DE: STAGn) for €78.0 million ($104.4 million). The portfolio in question includes 56 prescription and 15 OTC products. This acquisition, valued at 2.3x revenue, extends Stada’s position in the Swiss generic drugs market.

Canada’s CPPIB Credit Investments, which invests the assets of Canada’s pension plan, is paying $75.0 million to acquire future U.S. royalty rights to Treximet, a drug for the treatment of migraines in adults. The rights are being sold by Posen (NASDAQ: POZN), which originally licensed the drug from GlaxoSmithKline (NYSE: GSK). Besides the $75.0 million upfront payment, CPPIB will also pay POZN 20% of any royalties it receives. This allows the seller to monetize its future royalty streams and to participate to a limited extent in future royalties. Proceeds from the deal now permit POZN to forecast a profit for 2011. Since sales of Treximet account for 80% of POZN’s total revenue, this deal signals a radical change in direction for the company, which might include entering a new therapeutic area or winding down operations...Want to read more? Click here for a free trial to The Health Care M&A Monthly and download the current issue today