A Medical Device Daily
Johnson & Johnson (J&J; New Brunswick, New Jersey) has agreed to acquire Omrix Biopharmaceuticals (New York), a biopharmaceutical company that develops biosurgical and immunotherapy products, for roughly $438 million in a cash tender offer.
J&J said it agreed to purchase all outstanding shares of Omrix at $25 a share in an offer expected to close by the end of the year. The company said it expects Omrix to operate as a stand-alone entity reporting through Ethicon (Somerville, New Jersey), a J&J business that makes suture, mesh, hemostats and other products for surgical procedures.
According to the company, the acquisition of Omrix would provide Ethicon with an opportunity to strengthen its presence in active, biologic-based hemostats and convergent products for various surgical applications.
Ethicon currently has exclusive distribution rights in the U.S. and the European Union for Evithrom Thrombin Topical (Human) and Evicel Fibrin Sealant (Human), two active, biologic-based hemostats manufactured by Omrix. The two companies also are partnering on a Fibrin Pad product candidate, currently in Phase II clinical trials, as an adjunct to control mild-to-moderate soft-tissue bleeding.
J&J said the tender offer is conditioned on the tender of a majority of the outstanding shares of Omrix's common stock on a fully diluted basis. The closing is conditioned on Israeli antitrust clearance and other customary closing conditions.
The $358 million estimated net value of the transaction is based on Omrix's 17.5 million fully diluted shares outstanding, net of estimated cash on hand at time of closing, the company noted. The boards of directors of J&J and Omrix have approved the transaction.
In addition, Robert Taub, Omrix's founder and CEO, and entities controlled by Taub, have agreed to tender about 16% of Omrix's outstanding shares in the offer.
"Our partnership with Omrix has already expanded our capacity to provide innovative, next generation products that raise the standard of surgical care," said Alex Gorsky, company group chairman for J&J with responsibility for the Ethicon business worldwide. "We believe this transaction will further enhance our efforts to bring new, science-based products to patients and the healthcare professionals who treat them."
Assuming this transaction closes in 2008, J&J is expected to incur an estimated one-time, after-tax charge of about $120 million reflecting the write-off of in-process R&D charges. The acquisition is expected to be breakeven to slightly dilutive to J&J's earnings per share in 2009.
"Omrix and Ethicon have enjoyed a solid partnership for the past five years," Taub said. "As a formally unified entity, our successful distribution and development agreements will evolve into an even more attractive long-term growth strategy. Omrix's Israeli-based manufacturing and research & development expertise will be strengthened by the long-term stability and integration that this merger will create."
In other dealmaking activity:
• Invitrogen (Carlsband, California) and Applied Biosystems (Foster City, California) have officially merged. The new company, Life Technologies Corp., began trading on the Nasdaq Global Select Market under the ticker symbol LIFE.
The companies first reported plans to merge in a cash-and-stock deal valued at $6.7 billion over the summer (Medical Device Daily, June 13, 2008).
"This is an exciting time in the history of Invitrogen and Applied Biosystems," said Greg Lucier, CEO and chairman of the new company. "By combining these two highly respected brands, we are not only creating a stronger company, but an industry thought leader, uniquely positioned to help our customers accelerate and drive new discoveries and commercial applications."
• Covidien (St. Louis) and Depomed (Menlo Park, California) reported that Covidien has licensed worldwide rights from Depomed to use its AcuForm gastric retentive drug delivery technology for the exclusive development of four undisclosed products. The products will target a key strategic focus of Covidien's pharmaceutical business and address major medical needs, according to the company.
Covidien agreed to make a one-time up-front payment of $4 million, and could end up paying up to $64 million in additional development milestone payments over the next several years. Covidien also said it would pay Depomed a royalty on sales of products developed under the agreement.
Depomed will retain the exclusive option to promote the products developed under this license agreement within the obstetrics/gynecology specialty field. Once Depomed begins to promote these products, Covidien will pay Depomed a significantly higher royalty on the resulting net sales in this specialty, according to the agreement.