After a lengthy deal spree, Allergan $AGN is going shopping in the penny stock aisle.
The company says it has struck a deal to buy out Repros $RPRX and its troubled late-stage drug for uterine fibroids and endometriosis, held up by a partial hold at the FDA as regulators maintain demands for significantly more safety data.
The acquisition comes with an offer of 67 cents a share.
The biotech, based in The Woodlands, TX, has been struggling for years, with a low T therapy that aimed for an approval just as the agency was raising the bar on safety on testosterone treatments. Last summer Repros signaled that it remained in trouble on Proellex, with regulators demanding a bigger trial with a broader focus on safety for their drug to treat uterine fibroids.
In the meantime, the biotech’s share price dwindled, leaving the market cap at a minuscule $18 million.
Allergan already has a drug in the field. It’s been reviewing late-stage data on Esmya (ulipristal acetate), which is designed to treat heavy bleeding among women with uterine fibroids. Approved in Europe and up for a decision in the US, the EMA just days ago began an investigation into several cases of liver damage.
At the same time, AbbVie has been angling for an approval of elagolix, a potential blockbuster for endometriosis that it obtained in a deal with Neurocrine.
RBC Capital Markets’ Randall Stanicky has estimated peak sales for Esmya at more than $800 million, which is on the very highest end of the scale for sales projections. And he wants Allergan to sell off women’s health in a multibillion dollar deal — which evidently is not the favored route inside Allergan.
Evidently Allergan feels it can afford to do what Repros couldn’t and deliver the safety data that the FDA is looking for. The company has been under the gun for months as it sought to stave off generic competition to its franchise drug. But a deal with a Mohawk tribe on the patents only drew criticism from lawmakers and so far failed to protect the patents.
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