Look Out! Allergan Hunts for More M&As With a Budget Ranging From $100 Million to the Billions

November 8, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Dublin-based Allergan  has been a busy little squirrel this year, storing up its nuts—nine “stepping stone” acquisitions since January. Six of those came during the third quarter. And at the third-quarter conference call on November 2, company chief executive officer Brent Saunders said that more merger-and-acquisition activity was on the way.

So far, some of those deals included the acquisition of ForSight VISION5, RetroSense, a gene therapy company, Topokine and Vitae Pharmaceuticals, which both focus on dermatology, and Tobira and Akarna, which both are working on non-alcoholic steatohepatitis (NASH) drugs.

Over the next year, Allergan plans to have at least 11 compounds move through clinical trials. One example is brazikumab, which it’s co-developing with AstraZeneca (AZN) for Crohn’s disease. It plans to release Phase II data in 2017.

In the third quarter, Allergan reported total net revenues of $3.622 billion, up from $3.469 billion in same period in 2015. The increase, about 4 percent, was driven by strong performance of key brands and new product launches, although it was offset by the loss of patent protection for Asacol HD, and diminished revenues from Namenda XR and IR.

“Allergan continues to be among the best positioned biopharmaceutical companies to deliver long-term growth,” Saunders said in a statement. “Our top global products powered our performance in the third quarter, including Botox, Restasis, Linzess/Constella and Fillers. Our R&D teams continued to deliver exceptional results and build our pipeline with our Open Science R&D approach, including the six new stepping stone acquisitions we announced this quarter. And we substantially added to our share repurchase plan and added a first-ever dividend payable in 2017 to maximize shareholder value.”

At the end of the third quarter, September 30, the company had $27.4 billion in cash and marketable securities, and outstanding indebtedness of $32.8 billion. “Post the completion of the Teva transaction in the third quarter of 2016, we have continued to make important progress in our capital allocation strategy to ensure we maintain our Growth Pharma profile and support long-term growth for Allergan shareholders,” Tessa Hilado, Allergan’s chief financial officer, said in a statement. “We have completed $5 billion in our initial share repurchase program ahead of schedule, and are ready to go even further to drive shareholder value.”

At the end of the third quarter, September 30, the company had $27.4 billion in cash and marketable securities, and outstanding indebtedness of $32.8 billion. “Post the completion of the Teva transaction in the third quarter of 2016, we have continued to make important progress in our capital allocation strategy to ensure we maintain our Growth Pharma profile and support long-term growth for Allergan shareholders,” Tessa Hilado, Allergan’s chief financial officer, said in a statement. “We have completed $5 billion in our initial share repurchase program ahead of schedule, and are ready to go even further to drive shareholder value.”

Allergan indicated at the third-quarter conference call that it is looking at deals in the $100 million to several billion-dollar range. Jacob Bell, with BioPharmaDIVE, wrote, “Allergan stock was down around 2.5 percent to $203.6 in Wednesday morning trading. Its shares are down nearly 35 percent year-to-date as investors worry about the viability of the company’s business model and its sparse R&D offerings.”

Since today is election day in the United States, it’s worth noting that George Budwell, writing for The Motley Fool yesterday, cited Allergan as a stock to own if Hillary Clinton wins the election, whereas many think the stock market will plunge if Donald Trump wins.

Budwell wrote, “Pharma stocks have reacted poorly to Hillary Clinton’s assault on drug prices in the U.S. this year. However, the fact is that this stinging campaign rhetoric probably won’t translate into major changes in policy. The pharma industry, after all, has a massive presence in Washington, D.C., that has stymied similar efforts before, and Clinton, in particular, has received some sizable donations from top drugmakers in the past. So my take is that once the headwinds of the political season blow over, stocks such as Allergan and Horizon that have borne the brunt of this criticism will rebound in kind.”

is currently trading for $199.45.