|Actavis CEO Brent Saunders|
A little more than a year after Forest Labs bought out Furiex and its experimental irritable bowel syndrome drug eluxadoline in a $1.5 billion deal, Brent Saunders and Forest-buyer Actavis ($ACT) have scored an FDA approval that should surprise no one. And the agency paired the approval with a green light for Valeant's ($VRX) Xifaxan (rifaximin) in IBS, another drug that's been changing hands lately in the frenzy of M&A deals that has been changing the face of the industry.
Eluxadoline, to be sold as Viberzi, was worth $1.1 billion in cash and up to $360 million in contingent value rights when Saunders executed his deal to buy Furiex. Attracted by the idea of growing the company's GI drug portfolio, the experimental therapy had scored an impressive set of significant data for the Phase III. Analysts liked the strategic fit with their Linzess and the Aptalis business, positioning the buyer to leverage an existing commercial infrastructure.
They're tackling a big field. Dublin-based Actavis estimates that there are some 15 million IBS patients in the U.S.
Evercore ISI's Umer Raffat estimated today that the drug will sell for more than $3,000 a year and was impressed that the FDA is not sticking a black-box warning on the drug. Leerink estimated peak sales potential last year at a respectable $440 million by 2027, with Raffat keeping his estimate under the $1 billion blockbuster mark.
Valeant, which acquired Xifaxan in its $11 billion purchase of Salix last April, may have greater expectations in the field. Salix had ambitiously estimated that an IBS approval could add $1.6 billion in sales for the drug, according to Investor's Business Daily in its summer blockbuster forecast.
There is a caveat to the Viberzi CVR deal, though. Eluxadoline is an opioid receptor agonist and therefore could be addictive. If it 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."
"For some people, IBS can be quite disabling, and no one medication works for all patients suffering from this gastrointestinal disorder," said Dr. Julie Beitz, director of the Office of Drug Evaluation III in the FDA's Center for Drug Evaluation and Research. "The approval of two new therapies underscores the FDA's commitment to providing additional treatment options for IBS patients and their doctors."
- here's the FDA's release