Aliso Viejo-based Valeant Pharmaceuticals International’s pending $3.2 billion acquisition by Canada’s Biovail Corp. plays up strengths the two companies have developed in the past two years, according to an article on Seeking Alpha, an investor website.
Valeant and Biovail said last month they’re combining in a cash and stock deal. Biovail’s shareholders are set to own 50.5% of the new company with Valeant shareholders having 49.5%.
The new company will keep Valeant’s name and most of its management team, most notably Chief Executive J. Michael Pearson.
The Valeant-Biovail deal, which is expected to close at the end of the year, appears to make sense “as Biovail is bringing a much more interesting pipeline to the party to complement Valeant’s smaller, but cash-generative specialty products,” according to the article.
Biovail’s drugs in development largely came about through a focus on finding treatments for central nervous system disorders, it said.
Wellbutrin XL, an antidepressant and one of Biovail’s core products, lost patent protection at the end of 2006. To build up other drugs, Biovail made a series of licensing deals with various companies, including Irvine-based Cortex Pharmaceuticals Inc., and bought smaller drug makers.
Staccato loxapine, which treats agitation in schizophrenia and bipolar disorder, is the most advanced drug candidate from Biovail. The Food and Drug Administration is expected to make its decision on Staccato loxapine by fall 2011. If approved, analysts said it could see sales of $164 million by 2016.
Valeant, which has a pipeline of largely generic drugs, “appears to benefit more from the tie up,” according to Seeking Alpha.
The combined company is predicted to have a combined annual growth rate of 8% through 2016, or twice what’s predicted for Valeant alone.
Biovail on its own is projected to grow 13% in the same period if all its drug candidates come to fruition.
But “it should be remembered that these forecasts are based on expectations around Biovail’s largely risky pipeline candidates,” the article said.
Seeking Alpha quoted a forecast from London drug research and analysis company EvaluatePharma that the biggest growth driver over the next six years “at the sluggish-looking Valeant” is Cesamet, a drug that’s a synthetic version of marijuana’s active ingredient and is used to treat vomiting.
Seeking Alpha’s article said some have questioned the “merger of equals” concept because Biovail “appears to be pulling more of the levers for future growth” and shareholders may not have gotten adequate compensation for their shares at a 15% premium.
But such grumbles may go away because the combined company will have a greater geographical reach, a largely complementary product lineup of central nervous system and dermatology drugs, and good cost savings, according to Seeking Alpha.
Valeant and Biovail have said they expect $175 million worth of savings would come about through the deal. Up to 870 people, or 20% of the combined company’s workforce, will be cut.
Edwards Ties
Carmat SAS, a French artificial heart maker whose shareholders include the developer of a replacement heart valve marketed by Irvine’s Edwards Lifesciences Corp., said that it plans to raise up to $24.3 million in an initial public offering.
Carmat, which is based in the Paris suburb of Velizy-Villacoublay, said it would use proceeds from the offering to fund clinical studies on an artificial heart it’s developing.
Alain Carpentier, Carmat’s scientific director and developer of its artificial heart, also developed the Carpentier-Edwards heart valve.
Carpentier, a surgeon, is an emeritus professor at the Pierre & Marie Curie University of Paris and has held the patent for the artificial heart for more than 20 years.
Carmat is targeting its artificial heart at people who suffer from advanced heart failure and can’t find a human heart for a transplant.
Bits and Pieces
Hoag Memorial Hospital Presbyterian in Newport Beach said that its sleep center will be moving to a new, 6,500-square-foot building in August. A donation from philanthropists Richard and Judy Voltmer is funding the building’s construction. Separately, Hoag said it started offering intraoperative radiation therapy for treating breast cancer. The treatment delivers a concentrated dose of radiation after the removal of a tumor … Irvine drug maker Spectrum Pharmaceuticals Inc. said it named James Shields chief commercial officer with responsibility for sales and marketing. Shields, who was most recently with Teva Pharmaceuticals Industries Ltd., an Israeli company with Irvine operations, replaced Amar Singh … Tustin’s Toshiba America Medical Systems Inc., a maker of medical imaging equipment, launched a website for patients who receive diagnostic imaging examinations. The site provides information for patients prior to their imaging examinations, Toshiba said. … Quality Systems Inc., an Irvine healthcare information technology company, said an advertising campaign for its NextDDS software won an American Business Award in the best in health products and services category. The campaign promoted the use of NextDDS for managing electronic dental office records.
