Otsuka Pharmaceutical Co., Ltd. Buys AVANIR Pharmaceuticals For $3.5 Billion

Otsuka Pharmaceutical Buys Avanir Pharmaceuticals For $3.5 Billion

December 2, 2014

By Jessica Wilson, Breaking News Staff

Japanese firm Otsuka Pharmaceutical will acquire Avanir Pharmaceuticals Inc. for approximately $3.5 billion in cash, or $17 per share, news which sent shares of Avanir up almost 13 percent in midday trading Tuesday.

Avanir’s stock price has shot up 85 percent since Sept. 15, when the company reported that its drug Nuedexta was more effective than a placebo at reducing agitation associated with Alzheimer's disease. The companies expect the deal to close in the first quarter of 2015.

Nuedexta, which brought in $94 million from June 2013 to June 2014, comprises nearly all of Avanir’s revenue, according to company earnings statements.

“As we bring together Otsuka's experience and business track record in the area of mental illnesses with Avanir's strengths in neurologic diseases, we believe that we can evolve into a truly global CNS [central nervous system] pharmaceutical company,” Otsuka Pharmaceutical President Taro Iwamoto said in a statement announcing the deal. “Avanir’s creativity and proven execution on drug discovery and development for largely unexplored medical indications, typified by PBA [pseudobulbar affect], represents a hand-in-glove fit with Otsuka's culture.”

Avanir’s Nuedexta is currently approved for the treatment of PBA, a condition that causes uncontrollable crying or laughing and is linked to neurologic conditions such as Alzheimer’s, Parkinson’s and multiple sclerosis. Late-stage clinical trials are in the planning stages to continue evaluating the drug for the treatment of agitation associated with Alzheimer's disease.

“I am extremely excited to see these two organizations come together,” President and Chief Executive Officer of Avanir Keith Katkin said in a statement. “Together, our organizations will be able to more rapidly develop and commercialize needed medications for patients around the world.”

Avanir will retain its current structure after the close of the deal and will operate as an independent subsidiary of Otsuka America, Inc.

The patent for Otsuka’s Abilify, one of the world’s best-selling treatments for schizophrenia, will expire in 2015. Avanir’s treatment pipeline, which includes potential treatments for Alzheimer’s, Parkinson’s and migraines, represents new avenues of growth for the Japanese drugmaker.

“The [products] Avanir has are unique, exciting and fit with Otsuka,” Yasuhiro Nakazawa, a health-care analyst at SMBC Nikko Securities, told Bloomberg. “They will help Otsuka have sustainable growth after Abilify.”

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