Health Care Deal News, December 8, 2014 – 10 Years of Medical Device M&A

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Week ending December 5, 2014:

Recent Health Care M&A Deals

Acquirer

Target

Price

Medical Devices

BTG Plc

PneumRx, Inc.

$230 million

Pharmaceuticals

Imprimis Pharmaceuticals, Inc.

Park Compounding

N/A

Eli Lilly and Company

License to ZP-PTH

N/A

Physician Medical Groups

CRH Medical Corporation

Gastroenterology Anesthesia Associates, LLC

$58.6 million

Otsuka America Pays $3.5 Billion Cash for Avanir
Otsuka Pharmaceutical Co.’s U.S. subsidiary, Otsuka America, Inc., is set to acquire Avanir Pharmaceuticals, Inc. (NASDAQ: AVNR) for $3.5 billion in an all-cash offer. Avanir is a biopharmaceutical company specializing in diseases of the central nervous system. Its main product is Nuedexta, which treats the neurologic disease pseudobulbar affect (PBA). Otsuka not only gains Nuedexta, but the late-stage investigational compound AVP-786 in clinical development to treat agitation associated with Alzheimer’s disease. Avanir shareholders will receive $17.00 for each share of AVNR stock they own, which some analysts declared was on the low side. Although lawsuits are common occurrences following many M&A announcements, the investigations have begun to determine if AVNR’s board of directors adequately shopped the company before agreeing to Otsuka’s price.

Consolidation Is Just Beginning for Medical Devices Sector
The Medical Device sector is undergoing huge shifts this year. Consolidation is creating even bigger global leaders, while the mid-size and smaller manufacturers are merging to strengthen their product pipelines. Even a change in regulations regarding tax inversions hasn’t stopped the sector’s largest deal to date, between Medtronic (NYSE: MDT) and Covidien (NYSE: COV).  Through November 30th, we recorded 103 transactions in this sector and $84.1 billion in deal value. This is a banner year, no question. If the next Congress strikes down the 2.3% excise tax, 2015 could be even more interesting.

Medical Device Transactions, 2005 to 2014*

Year

Deals

Change

Dollars

Change

2005

140

5%

$42.1 billion

98%

2006

150

7%

$53.3 billion

26%

2007

194

29%

$58.2 billion

9%

2008

167

-14%

$69.3 billion

19%

2009

177

6%

$13.9 billion

-80%

2010

185

5%

$41.7 billion

200%

2011

175

-5%

$65.8 billion

58%

2012

144

-18%

$25.1 billion

-62%

2013

103

-29%

$11.9 billion

-53%

2014*

103

0%

$84.1 billion

608%

* = through Nov. 30. Source: The Health Care M&A Information Source, December 1, 2014

Eight CCRCs Change Hands, Twice
Health Care REIT (NYSE: HCN) sold eight CCRCs for $435 million to Senior Living Communities, which operates all eight, and one other in Indiana. The acquired communities, one rental and seven entrance-fee, are located in South Carolina (4), North Carolina (2) and one each in Georgia and Florida. Overall occupancy is 85.4% and the average age is 12 years. Health Care REIT had been receiving about $24.4 million in rent, representing a 5.6% yield on the sales price. It recognized a $95 million gain on the sale, which was part of a planned $625 million of divestitures slated for 2014. Senior Living Communities turned around and sold all eight CCRCs to National Health Investors, Inc. (NYSE: NHI), for $476 million. The higher price reflects a higher initial cash rent of $31 million, or a yield of 6.51%.

Allena Pharmaceuticals Secures $25 Million Series B Financing
Specialty biopharmaceutical company Allena Pharmaceuticals, Inc., a specialty biopharmaceutical company focused on developing and commercializing non-systemic oral protein therapeutics to treat metabolic and orphan diseases, completed a $25 million Series B financing. The round was led by HBM Partners, joined by existing investors Frazier Healthcare, Third Rock Ventures, Bessemer Venture Partners and new investor Pharmstandard International. The financing enables Allena to advance its lead program to treat hyperoxaluria, ALLN-177, into Phase 3 development. The program recently began Phase 2 trials, and will add more Phase 2 trials in early 2015…………Click here for a free trial to The Health Care M&A Information Source and download the current issue today.

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