March 13, 2015
By Alex Keown, BioSpace.com Breaking News Staff
RALEIGH, N.C. – If Salix Pharmaceuticals, Ltd. sells to one of its two suitors, Irish Pharma Endo International or Canadian-based Valeant Pharmaceuticals International, Inc. , jobs in the Research Triangle Park area are likely to be eliminated, but there could be silver lining, The Triangle Business Journal reported Friday.
North Carolina-based Salix Pharmaceuticals, which manufactures medications to treat various stomach ailments, is being heavily courted by the two pharmaceutical entities, the latest move in a heavy round of industry acquisitions over the past few months. Last year, $268 billion in pharmaceutical mergers and acquisitions were announced globally, more than double the volume in 2013, the Wall Street Journal reported.
On Wednesday Endo notified Salix offering $175 a share in cash and stock, about $11.2 billion. The company was looking to outbid Valeant’s $10 billion offer, about $158 per share.
Last year Salix was in takeover talks with Botox-maker Allergan Inc. . Allergan had offered to pay $175 a share for Salix.
Salix reported $1.1 billion in total revenue last year.About 220 jobs in Raleigh would be at risk in a takeover, most of them in “back-office functions,” the Triangle Business Journal reported.
Salix markets Xifaxan, a drug used to treat traveler’s diarrhea as well as reduce risk of the recurrence of overt hepatic encephalopathy in patients with advanced liver disease. The medication could also be used as a treatment for irritable bowel syndrome, if the U.S. Food and Drug Administration (FDA) gives final approval. Xifaxan is an antibiotic that is designed to pass through the stomach and into intestines without being absorbed into the bloodstream. Because of this design, the medication will not be effective in treating other ailments, only those in the intestines. Analysts say sales of Xifaxan could exceed $1 billion in yearly sales.
Even if the sale goes through and jobs are eliminated, the Journal reported a significant number of employees have accrued stock options over the years and stand to make a tidy profit if the sale goes through at an expected $158 to $175 per share, depending on which company came out on top.
A silver lining to the job loss could be potential seed money for other biotech startups in the triangle area, which includes Raleigh, Durham and Chapel Hill. That potential seed money would go hand in hand with a $100 million initiative former PPD and Furiex Pharmaceuticals, Inc. founder Fred Eshelman launched at the University of North Carolina in Chapel Hill. Eshelman, who has donated tens of millions to the university’s school of pharmacology, made the nine-figure donation to help launch startups at the school, the Journal reported. UNC’s program has generated 130 patents and created 15 spin-off companies.
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Vertex Pharmaceuticals made news last week when it terminated leases on three properties in Cambridge, Mass, that freed up 313,000 square feet of space in the Genetown area. The company has spent a significant part of 2014 consolidating its operations on the South Boston waterfront, leasing 291,000 square feet of office space at West Kendall Street in Cambridge’s Kendall Square. So we wanted to ask the BioSpace community: Is Boston going to be getting more biotech leases anytime soon, or fewer tenants?
