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Endo to buy Penwest

Endo Pharmaceuticals has entered into an agreement to buy Penwest Pharmaceuticals for around $144m in cash

Endo Pharmaceuticals has entered into an agreement to buy the drug-delivery technologies company Penwest Pharmaceuticals for around $144m in cash. The deal builds on an existing relationship between the two companies, which have been working in partnership since 1997 on the development and commercialisation of the oxymorphone pain relief medication Opana ER and related products.

The acquisition agreement values Penwest at $5.00 per share and calls for Endo to acquire all outstanding common stock. The merger is expected to close in September.

Endo said it had agreed to buy Penwest in order to maximise the value of the Opana franchise and to gain the company's drug-delivery technologies and speciality and generics pipeline. Penwest has a number of collaborations with other companies and focuses in-house mainly on developing products for rare disorders of the nervous system. The company currently has a coenzyme Q10 analog in phase II clinical development for improvement of mitochondrial respiratory chain diseases and is seeking a partner for phase IIb trials of a pain medication known as Nalbuphine ER. 

Endo said the acquisition of Penwest should be immediately accretive to 2010 earnings per share, due mostly to the fact that the company will no longer be paying royalties to Penwest on Opana, as well as to certain tax attributes of the merger. Endo confirmed 2010 revenue guidance of between $1.63bn and $1.68bn and raised its adjusted diluted earnings per share (EPS) to between $3.30 and $3.35 per share. Endo had earlier forecast 2010 EPS to come in at between $3.25 and $3.30 per share. 

Separately, Endo has filed a marketing application with the US Food and Drug Administration for an extended-release formulation of oxymorphone for the relief of moderate to severe pain in patients requiring continuous, around-the-clock opioid treatment for an extended period of time. The new formulation, which was developed in partnership with the global pharma firm Grunenthal, is designed to reduce the potential for abuse and misuse.

The New Drug Application (NDA) contains clinical and non-clinical data intended to show that the new formulation of oxymorphone thwarts attempts to break, crush, extract, powder or pulverise the product.

10th August 2010

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