AVANIR Pharmaceuticals Gives Suitors Two Big Reasons To Bid

AVANIR Pharmaceuticals Gives Suitors Two Big Reasons To Bid

October 31, 2014

By Riley McDermid, BioSpace.com Breaking News Staff

Avanir Pharmaceuticals Inc. is likely going to see a host of suitors interested in its newly protected patented pipeline and promising Alzheimer’s treatment, a suite of analysts told Bloomberg this week.

The company’s most attractive drug candidate so far is Nuedexta, which is approved to treat emotional outbursts linked to neurological diseases. Its effects on treating the pseudobulbar affect (PBA), or uncontrollable crying or laughing in patients with Alzheimer’s, Parkinson’s and multiple sclerosis, has caused a leap in sales that provided the majority of Avanir’s $113 million in sales during fiscal year 2014.

The $2.35 billion company has already been in talks over a possible merger or sale to another specialty drug company, Bloomberg quoted an unnamed source as saying. But when a version of Nuedexta saw success in its Phase II trials in mid-September, the company’s stock price skyrocketed 85 percent, making Avanir too expensive to buy for those particular suitors.

Chief Business Officer Gregory Flesher told Bloomberg the company is open to merging or exiting soon. “If there’s another company that we could come together with that would really make sense, we’d be open to that,” Flesher said.

A spokesman for declined to comment on whether it is exploring a specific sale.

Aliso Viejo, Calif.-based Avanir has also seen success in the closely watched biotech-related legal venues, winning a case in April that protects its patents from generic competition for over a decade. That ruling gave Nuedexta exclusivity through 2026. Coupled with its promising Alzheimer’s drug, Avanir is now a prime target for larger companies, said analysts.

“There’s been two important events this year that could arguably make Avanir much more attractive from an acquisition perspective,” Jason Butler, a New York-based analyst at JMP, told Bloomberg. “Central nervous system assets that are approved and have this kind of growth potential are pretty scarce.”

Butler named Eli Lilly and Co. , H. Lundbeck A/S, Mallinckrodt Plc and Shire Plc as possible acquirers. Neither Irish firm Shire and Mallinckrodt would comment on Avanir negotiations, said Bloomberg, and requests for comment from Eli Lilly and Lundbeck were ignored.

Ritu Baral, a biotech analyst at Cowen Group Inc., told Bloomberg that all acquirers will likely wait to see how the new application of Nuedexta does in Phase III trials.

“They will be taking a keen interest to see how that unfolds,” she said. “Then we’ll have a better idea of what the path forward looks like, at which point I think a lot of us will be thinking about where this asset makes sense as far as which large pharma CNS bag.”

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