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Teva starts M&A push with $3.5bn Auspex buy

Aims to diversify business away from dependency on Copaxone

Teva Pharma logo 

Teva has got the ball rolling on its promise to make acquisitions this year with a $3.5bn offer to buy central nervous system (CNS) therapy specialist Auspex.

The Israeli company needs to diversify its business away from its current reliance on multiple sclerosis blockbuster Copaxone (glatiramer acetate) - which is facing the threat of generic competition in the US from September - and investors have been pressuring the company to make some big deals to swell its product portfolio.

Teva is paying $101 per share for Auspex, which specialises in modifying existing drugs with deuterium chemistry to improve their safety and efficacy profiles.

The takeover of Auspex will give the Israeli firm a product candidate called SD-809 (deutetrabenazine) that has already cleared phase III trials treatment of chorea (involuntary movements) associated with Huntington's disease and could be on the market next year in the US.

SD-809 is also in phase III testing for tardive dyskinesia and earlier-stage development for chorea associated with Tourette syndrome, while Auspex' development pipeline also includes deuterated forms of pirfenidone (SD-560) for idiopathic pulmonary fibrosis and levodopa for Parkinson's disease.

The deal - which has been approved by Auspex' board - gives Teva a near-market drug in one of its core therapeutic franchises. It is also relatively low risk, as the non-deuterated form of tetrabenazine is already sold as Xenazine by Lundbeck as a treatment for Huntington's and achieved sales of 1.7bn Danish krone ($245m) last year. 

In trials, Auspex' drug seemed to be less likely to cause depression and anxiety than the parent compound and also seemed better at reducing chorea, and analysts have suggested it could make around $500m a year at peak providing it secure approval in more than one indication.

Moreover, it may also allow a quick route to market by referencing Xenazine data in its application - if the FDA agrees that it can be filed under the truncated 505(b)(2) regulatory pathway. 

Investors seemed somewhat unmoved by the announcement yesterday, however, with an initial spike in the company's share price quickly settling back down to earlier levels. 

The muted response suggests some shareholders were hoping for a large-scale transformative deal - Mylan and Mallinckrodt had both been mentioned in dispatches as rumours of an a deal gathered last week - and were disappointed the company now seems almost certain to embark on a series of smaller transactions.

"The acquisition of Auspex is a significant step in strengthening Teva's leadership position in CNS and advances us into underserved movement disorder markets," said the company's chief executive Erez Vigodman, noting that it ties in with the company's pledge to seek out "business development opportunities that are closely aligned with our core therapeutic areas".

"This transaction represents a first major step with regards to that commitment and we expect to continue this focus in the future," he added.

Article by
Phil Taylor

31st March 2015

From: Research, Sales



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