Health Care Deal News: Spotlight on Pharmaceuticals-February 2012

In January’s largest pharma deal, Bristol-Myers Squibb (NYSE: BMY) is buying Inhibitex (NASDAQ: INHX). Headquartered in Alpharetta, Georgia, INHX is focused on developing products to prevent or treat serious infections such as shingles and hepatitis C virus. On a trailing 12-month basis, the company generated revenue of $53.0 million and a net loss of $25.0 million. Under terms of the deal, BMY is offering $26.00 per share. Taking into account options and warrants, the total purchase price is $2.5 billion. This bid offers INHX shareholders a 163% premium to the stock’s prior-day price. The acquisition gives BMY a set of products to compete with Gilead Sciences (NASDAQ: GILD) on the very hot hepatitis C front. INHX’s hepatitis C treatment INX-189, an oral drug, will be the centerpiece of BMY’s efforts in this market; results from phase 2 studies are expected later this year. BMY envisions combining INX-189 with products in its own pipeline to offer an all-oral regimen which will eliminate the need for interferons, which can cause flu-like side-effects.

FORMA Therapeutics is entering into another R&D collaboration, this one with Germany’s Boehringer Ingelheim GmbH to discover and develop new drug candidates for treating cancer. The focus is on small molecule drugs against oncology-relevant protein-protein interactions. Many so-called “un-druggable” and/or novel targets in oncology involve protein-protein interactions, so this collaboration offers the promise of opening up a set of therapeutics previously thought unobtainable. Under terms of the agreement, valued at as much as $815.0 million, Boehringer Ingelheim will pay $65.0 million in an upfront payment and research funding. Additionally, it will pay up to $750.0 million in precommercial milestone payments for programs resulting from the collaboration.

Watson Pharmaceuticals (NYSE: WPI) is acquiring Ascent Pharmahealth, a generic pharma business in Australia and Southeast Asia, for approximately $393.0 million in cash. The seller is India’s Strides Arcolab (BSE: 532531), headquartered in Bangalore. This acquisition, valued at 2.5x revenue, makes Watson the fifth largest generic pharmaceutical company in Australia based on revenue.  WPI also becomes the largest generics company in Singapore and gains an established commercial presence in Malaysia, Hong Kong, Vietnam and Thailand. Strides is selling this business to concentrate on its steriles segment. Jefferies advised Strides on this transaction.

Still Down Under, Australia’s Bionomics (ASX: BNO) is entering into a collaboration, research and licensing agreement for Ironwood Pharmaceuticals to develop and commercialize BNO’s anti-anxiety compound BNC210 and other related compounds. Based in Cambridge, Massachusetts, Ironwood is a privately held company developing drugs in a range of therapeutic areas and at various stages of clinical development. Under terms of the deal, Ironwood will make up to $345.0 million in upfront and milestone payments and research funding. Royalties on sales of collaboration-related products are also contemplated. This agreement diversifies Ironwood’s drug pipeline with a CNS candidate that has been through phase 1 clinical studies. The company is also developing a compound to treat irritable bowel syndrome.

Cornerstone Therapeutics (NASDAQ: CRTX), a pharma company focused on drugs for the respiratory market, is branching out with the purchase of Cardiokine,  a specialty pharma developing new therapies for heart conditions. Under terms of the deal, CRTX will pay $1.0 million upfront and commit to $147.0 million in a variety of contingency payments. Cardiokine recently completed a series of phase 3 clinical trials for Lixivaptan, a potential treatment for hyponatremia, which occurs when there is not enough sodium in the blood. Cardiokine filed an NDA for Lixivaptan with the FDA on December 29, 2011, and FDA approval will trigger some of the contingency payments. Cardiokine has received $87.0 million from private investors since its founding in 2004...Want to read more? Click here for a free trial to The Health Care M&A Monthly and download the current issue today