Allergan Snags MAP for $958M, Targets Migraine Franchise
By Marie Powers
Anticipating a thumbs-up from the FDA on acute migraine drug Levadex and building from an existing co-promotion arrangement, Allergan Inc. is purchasing MAP Pharmaceuticals Inc. in a cash deal, acquiring the company's shares at $25 each.
The transaction values MAP at approximately $958 million, with the offering price representing a 60 percent premium over MAP's closing price of $15.58 on Tuesday.
The buy is designed to strengthen Allergan's grip on the migraine headache space. The company's Botox (onabotulinumtoxinA) is one of two approved products in chronic migraine, together with Topamax (topiramate, Johnson & Johnson). MAP's Levadex, an orally inhaled formulation of the intravenous migraine drug dihydroergotamine (DHE), is under FDA review in acute migraine following a complete response letter (CRL). MAP submitted its original new drug application (NDA) for Levadex in May 2011 via the 505(b)(2) pathway.
In the CRL, issued last March, the FDA raised questions relating to chemistry, manufacturing and controls and to issues related to a facility inspection at a third-party manufacturer. At the time, MAP characterized the third-party manufacturer questions as a nonissue, noting that the company believed its manufacturer already had provided the FDA with the requested information. (See BioWorld Today, March 28, 2012.)
MAP, of Mountain View, Calif., resubmitted the Levadex NDA in October 2012, after raising $52 million through a public offering. The drug has a PDUFA date of April 15. (See BioWorld Today, Aug. 2, 2012.)
"With the PDUFA approaching, we believe Allergan management must be confident in the approvability of the product," RBC Capital Markets LLC analyst Shibani Malhotra posted in a bulletin Tuesday evening after the acquisition was disclosed. "That said, we do believe that the acquisition fits well with Allergan's neurology franchise as the company already has a sales force in place to support Botox's neurologic indications."
Despite prodding about the odd timing, David Pyott, Allergan's chairman, president and CEO, sidestepped the possible existence of a competing offer. "Sometimes it's just good to move when all the stars and the planets come into alignment," he said cryptically.
Marketing Effort Offers Levadex Entry Point
Still, the companies have shared history. In January 2011, Irvine, Calif.-based Allergan inked a $157 million agreement with MAP to co-promote Levadex, contingent on regulatory approval, to neurologists and pain specialists in the U.S. and Canada. At the time, MAP CEO Timothy Nelson described the Allergan alliance as "very complementary," based on Allergan's "well-established presence in the neurology space." (See BioWorld Today, Feb. 1, 2011.)
Pyott pounded that refrain, noting that Botox is approved in 56 countries in chronic migraine, providing Levadex with a broad entryway to the neurology and pain specialty space. "Once the merger is complete, and if Levadex has been approved by the FDA and Health Canada, we'll be able to move the economics from a 50/50 split to profits in these specialties to capturing 100 percent of the worldwide value," he said during a Wednesday morning conference call.
Botox is indicated for chronic migraine, defined as 15 or more headaches per month. If approved, Levadex would address acute migraine two to eight headaches a month by converting the use of DHE from a predominantly hospital-based therapy to a self-administered, home-based therapy using MAP's technologies.
"The call point for Levadex is about as perfect as one could imagine for a complementary product," Pyott said.
Moreover, in 2014, Allergan plans to augment its U.S. specialty sales force, targeting headache specialists who are not board-certified neurologists or pain specialists but who are high-volume migraine medication prescribers.
The Allergan-MAP transaction, which was unanimously approved by the boards of both companies, will be executed through a cash tender offer followed by a second step merger. The acquisition is expected to close by the second quarter. Completion of the deal is subject to the tender of at least a majority of MAP's outstanding shares of common stock, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.
Allergan plans to fund the deal with a combination of cash on hand, cash equivalents and short-term borrowing under its commercial paper program. Despite ongoing research and development and other costs for Levadex, including a likely postmarketing pediatrics study, company officials expect the transaction to be dilutive to 2013 earnings per share by approximately 7 cents on a GAPP basis and accretive to earnings per share by the second half of 2014, assuming the deal closes on schedule and Levadex is approved on or before its PDUFA date.
Wednesday, shares of MAP (NASDAQ:MAPP) opened 59 percent higher, at $24.76, and remained in that neighborhood throughout the day, gaining $9.13 to close at $24.71. Volume was 170 times the average, at nearly 46 million shares. Allergan (NYSE:AGN) lost $1.10 to close at $104.65.
Migraine developer NuPathe Inc. also enjoyed a small boost on MAP's coattails. Last week, the Conshohocken, Pa.-based company received a green light from the FDA for its sumatriptan patch, Zecuity (sumatriptan iontophoretic transdermal system), in acute migraine headache pain. The company is seeking one or more partners to market Zecuity in the U.S., potentially in a co-promote deal, and in major global markets, including Europe and Japan. On Wednesday, NuPathe's shares (NASDAQ:PATH) gained 22 cents, to close at $3.80. (See BioWorld Today, Jan. 22, 2013.)
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