Furiex has landed its big buyout deal. After Furiex nabbed promising late-stage data on a new drug for irritable bowel syndrome and virtually slapping a "for sale" sign on the company, Forest Labs has swooped in to buy the biotech company ($FURX) for $1.1 billion and potentially $360 million in contingent value rights.
The main prize here is the IBS drug eluxadoline. Forest is selling off the royalty rights to the biotech's revenue stream on alogliptin and Priligy to Royalty Pharma for about $415 million. It's paying $95 a share to stockholders and up to $30 a share for a CVR that pays off after a prospective approval. And deal-hungry Forest is getting a new drug for its GI business that is NDA-ready.
The deal shouldn't come as a surprise to anyone. Furiex chairman Fred Eshelman made it quite clear what the company's strategy was when the drug cleared Phase III. The company could market the drug itself, the cofounder of PPD told FierceBiotech, but that stand had the distinct flavor of a bargaining position to take with a would-be buyer over an actual price. It was clearly not the outcome that the company is looking for.
 |
| Forest CEO Brent Saunders |
"It is a natural extension of our GI business following our $2.9 billion acquisition of Aptalis earlier this year," said Forest CEO Brent Saunders in a statement. "We believe eluxadoline will be very complementary to our anchor GI product Linzess and additive to our broader GI portfolio, making us more relevant to gastroenterologists and primary care physicians. With eluxadoline, we expect to have one of the broadest product offerings for the $38 billion GI disease market."
The deal earned a thumbs up from Leerink. "Overall, we think the deal makes a lot of sense as (1) eluxadoline (IBS-D) is a good strategic fit with Linzess and the Aptalis business; (2) the deal is expected to be accretive in yr 1 of the eluxadoline launch, proof that FRX will be able to leverage its existing commercial platform with minimal added spend; (3) based on our NPV analysis -- break-even sales targets implied in the valuation look very conservative to us given category size and FRX/ACT's strong commercial platform in gastroenterology and primary care. Based on our NPV analysis (pg. 2), we est. the hurdle to justify the deal is ~$440m in peak 2027 sales."
There is a caveat to the CVR deal, though. If eluxadoline receives FDA approval and is not scheduled as a controlled drug by the DEA, then shareholders can get the full $30 for the CVR. "If eluxadoline is designated as a Schedule 4 or Schedule 5 controlled drug by the DEA, holders of the CVR will receive $10 per share (approximately $120 million in the aggregate) or $20 per share (approximately $240 million in the aggregate), respectively."
- here's the release