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Mallinckrodt offers $1.3bn for Cadence Pharma

Deal would include injectable painkiller Ofirmev

Irish pharma company Mallinckrodt has agreed a $1.3bn deal to buy US biotech Cadence Pharmaceuticals and its fast-growing injectable painkiller Ofirmev.

The hefty price tag reflects the sales potential of Ofirmev (acetaminophen), which has been tipped to reach sales of between $500m and $1bn at peak, and the fact that the deal will allow Mallinkcrodt to expand its presence in the US hospital channel.

Mallinckrodt's offer comes shortly after Cadence won a patent dispute lawsuit with Exela Pharma Sciences, reinforcing the likelihood that Cadence will have market exclusivity for Ofirmev in the US until at least 2017 and potentially 2021.

Perrigo also mounted a patent challenge against the product but reached a settlement agreement with Cadence last year that will keep it off the market until 2020.

Ofirmev was first launched in 2011 and saw sales reach $50m in 2012 and $110m last year, capturing an estimated 3 per cent of the US hospital analgesia market. Despite numerous efforts over the years by formulation scientists, Cadence was the first company to successfully develop an intravenous version of acetaminophen.

It appears to have filled a niche in the post-operative pain relief setting, avoiding the need for opioid analgesics at a time when a patient may be too groggy to take non-opioid painkillers by mouth.

A study published last year showed that adding IV acetaminophen to narcotics improved pain-relief, reduced side effects and lowered the opioid dose needed in children undergoing tonsillectomies, with potential savings of $9m a year if it was applied across the board for this procedure in US hospitals.

Mallinckrodt has agreed to pay $14 per share in cash for Cadence, which represents a 32 per cent premium on the average trading price for the stock over the last month.

The deal is expected to close in mid- to late-March, and the Irish group's chief executive Mark Trudeau said it would help Mallinckrodt become "a leading global specialty pharmaceuticals company."

Mallinckrodt is also active in the analgesia sector and last year won priority review status from the FDA for MNK-795, a controlled-release oral formulation of oxycodone and acetaminophen intended for the management of moderate to severe acute pain where the use of an opioid analgesic is appropriate.

Article by
Phil Taylor

14th February 2014

From: PME

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