The field of potential Big Pharma suitors for Irvine-based Allergan Inc. could widen in the wake of the company’s stock price drop over the past few months.
Allergan has seen its shares drop nearly 30% since the middle of April, a skein that first started to unravel with a delay on an approval for a drug candidate and pushed along more recently by word of looming generic competition for one of its biggest sellers.
A report from Bloomberg last week noted Allergan “just got $9.6 billion cheaper for buyers looking to get their hands on” the drug maker’s flagship Botox wrinkle treatment because of the stock drop. The recent declines put Allergan’s market value at about $26.5 billion.
Some analysts are predicting that Allergan would still fetch as much as $35 billion in a sale because management would be unlikely to consider a price lower than its all-time high, which came on a share price of $116 in April. Takeover talk isn’t foreign to Allergan, in any case. It had revenue of $5.8 billion and posted a profit of $1.1 billion in 2012.
Johnson & Johnson, the New Brunswick, N.J.-based diversified healthcare behemoth, has long been mentioned as a possible suitor.
The recent rough-going for Allergan shares had some industry observers adding New Jersey-based Merck & Co. and GlaxoSmithKline PLC in the U.K. to the list of potential suitors. Other companies now in the conversation are Switzerland-based Nestlé SA, which is seen as a possible bidder because it could merge its Galderma SA skin-care business into Allergan, according to Bloomberg.
Spokespeople for Allergan, Merck, GlaxoSmithKline and Nestlé all declined to comment for this story.
Allergan’s diversified drug portfolio will likely keep the speculation churning because it includes “all the eye-care pharma one could want,” analyst David Maris of the Bank of Montreal told Bloomberg.
There’s also the chance that Allergan addresses the concerns that led to the rough stretch for its shares. The dip in May came after the company put off final studies on a pair of its late-stage drug candidates.
Darpin
The drug maker said it was delaying a late-stage trial of its Darpin candidate for treating age-related macular degeneration, which is a leading cause of blindness. Allergan said a second-stage trial of Darpin showed some product differentiation from Lucentis, a rival treatment from Switzerland-based Roche Holding AG, but didn’t support Darpin’s direct move to late-stage development.
Allergan also said a trial of bimatoprost, the active ingredient in its eyelash-growing drug Latisse, did not show sufficient hair growth in a test for baldness.
Shares continued to fall last month when the Food and Drug Administration (see Healthcare column, page 56) said a generic version of Allergan’s Restasis dry-eye drug could be approved without requiring human clinical trials if a generic’s composition is similar enough.
Restasis is expected to have sales of $850 million to $890 million this year, some 15% of the company’s projected total of about $6 billion.
The FDA’s proposed testing standard touched off a 12% dip, with 15.5 million Allergan shares trading hands, close to six times their typical daily volume. Allergan’s market value fell to less than $25 billion for the first time in nearly a year after that incident.
Allergan executives said they plan an aggressive challenge to the FDA’s proposal, including plans to file a “citizen’s petition to ensure that the appropriate scientific considerations are evaluated.”
Citizen’s petitions are filed to the FDA to request the agency to take certain actions.
Shares recovered shortly afterward, although they remain down 5% since the start of the year.
