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 Just hours later on Tuesday, Allergan announced it would also pay
$50 million upfront and make future milestone payments for Akarna
Therapeutics Ltd, a privately held company that is planning
early-stage studies of a treatment for NASH.
There are no approved treatments for the disease affecting more than
15 million Americans, which involves accumulation of fat in the
liver not caused by alcohol, and can lead to cirrhosis, liver
transplants or liver cancer.
"Allergan is making an excellent move into the NASH space, which is
under appreciated by Wall Street and one of the major categories of
untreated diseases," said Len Yaffe, portfolio manager of StocDoc
Partners who holds shares of Tobira.
Allergan's offer on Tuesday of $28.35 upfront per Tobira share is a
whopping 500 percent premium to the stock's close on Monday, which
had given Tobira a market capitalization of about $89 million.
Tobira shareholders could receive up to $49.84 per share, contingent
on the company achieving certain milestones.
Tobira's stock surged 720 percent to $38.91 on Tuesday. But
Allergan's fell 2.7 percent to $238.67 as some industry analysts
said the deal came at a steep price.
Tobira shares have been on a roller coaster ride since July 25, when
they tumbled 60 percent to $4.50 after the company's lead product,
cenicriviroc, failed its main goal in a mid-stage trial of showing a
2-point reduction on a scale that measures features of NASH
(nonalcoholic steatohepatitis).
But cenicriviroc achieved a secondary goal by reducing by at least
one stage the extent of fibrosis, a scarring of the liver that can
lead to cirrhosis, without worsening of NASH. Tobira said the drug
has potential to be approved if that favorable secondary finding can
be duplicated in a larger late-stage study.
Yaffe said cenicriviroc and related therapies being developed by the
company have potential to reap annual sales of $5 billion.
He said experimental NASH drugs being developed by Gilead Sciences
Inc have similar sales potential and that treatments being studied
by Intercept Pharmaceuticals Inc and others also have blockbuster
sales potential.
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Allergan research chief David Nicholson, in an interview, said liver
biopsies are now required to confirm NASH, but
less-invasive diagnostic tests should be available by the time the
first NASH treatments reach the market, or soon after.
"The science in NASH is breaking now and this could become one of
Allergan's largest categories" of medicines, Nicholson said.
The proposed acquisition is the latest in a string of deals
orchestrated by Brent Saunders, Allergan's chief executive, since
the company's planned $160 billion merger with Pfizer Inc collapsed
in April because of unfavorable new U.S. tax regulations.
Allergan, best known for its Botox anti-wrinkle treatment, last week
said it would pay $639 million for Vitae Pharmaceuticals, which is
developing drugs for psoriasis, eczema and autoimmune disorders. It
agreed on Sept. 6 to pay $60 million for RetroSense, a privately
held company developing an ophthalmology gene therapy.
Other major contenders in the race to develop a drug to treat NASH
include Conatus Pharmaceuticals Inc, whose shares rose 19.4 percent,
and Galectin Therapeutics Inc, whose stock gained 14.8 percent.
Covington & Burling are Allergan's lead legal counsel. Centerview
Partners and Citi are Tobira's financial advisers, while Skadden,
Arps, Slate, Meagher & Flom LLP and Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian LLP are its legal counsel.
(Reporting by Ransdell Pierson in New York and Natalie Grover in
Bengaluru; Editing by Savio D'Souza and Matthew Lewis)
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