Allergan Inc.’s rival bid for Santa Barbara-based Inamed Corp. earlier this month seemed to appear out of left field, coming eight months after Medicis Pharmaceutical Corp. of Scottsdale first set its sights on the maker of breast implants and other products.
Allergan was watching and waiting, according to Douglas Ingram, the company’s corporate vice president, general counsel and secretary.
Before making a move, the company wanted to see a Securities and Exchange Commission filing from Medicis on the terms of its offer for Inamed. In March, Medicis offered $2.8 billion for Inamed, a deal that’s shrunk to about $2.5 billion now.
“Obviously, if we were going to make an offer for Inamed, we needed to see that (filing) to get the most up-to-date information about Inamed and also to make sure we knew precisely what the proposed transaction would be between Medicis and Inamed,” he said.
“Interestingly enough, no SEC filing ever came out of Medicis, not for months and months. In fact, they only filed a few weeks ago,” Ingram said.
Allergan made a $3.2 billion cash and stock offer for Inamed roughly two weeks ago, setting the stage for a potential bidding war for Inamed, which makes dermatology products, breast implants and a “lap band” device that’s an alternative to gastric bypass surgery for fighting obesity.
There’s another wrinkle to the deal: Medicis itself is a takeover target. Santa Barbara-based Mentor Corp. said it could sweeten a $2.2 billion offer for Medicis.
As for Inamed, Allergan wants the company to bolster its cosmetic medicine business, led by wrinkle-reducer Botox.
“We took a careful look at Inamed and it became obvious to us that there was tremendous strategic value and a compelling financial basis to have Inamed become part of the Allergan family,” Ingram said.
Marrying Botox Cosmetic and others with Inamed’s offerings “will result, ultimately, in a world-leading aesthetic franchise for the new entity,” he said.
Inamed’s dermatology products include dermal fillers, which are used to smooth out the lower part of the face. Earlier this year, Allergan had expressed some interest in acquiring a dermal filler to bulk up its cosmetic products.
“We’re real excited about the dermal fillers that Inamed has,” Ingram said. “It has a very broad range of dermal fillers on the market. But this transaction is much bigger than dermal fillers.”
Allergan isn’t planning on keeping Inamed’s Reloxin, a drug under development that stems from the same ingredient as Botox and has been seen as a potential rival.
“We’re very confident that we would not be permitted to keep Reloxin as well as Botox. Reloxin is going to be a direct competitor to Botox Cosmetic and a potentially significant competitor,” Ingram said. “So clearly, a competitor needs to be in control of Reloxin and to compete with us. We’re completely committed to that and to the divestiture of Reloxin.”
Saline and silicone breast implants make up another of Inamed’s markets. Silicone implants, in particular, are slowly making their way back into the U.S. after having been banned by regulators for more than a decade.
“Even in the absence of silicone breast implants in the U.S., Inamed’s breast implant business has been growing very well over the years,” Ingram said. “Historically, the segment of breast implants has been growing about 19% on a revenue basis.”
In September, the Food and Drug Administration issued an “approvable letter” to Inamed for its silicone gel breast implants after an FDA panel initially voted against approving an application for the implants.
The agency said that it made its change after Inamed addressed the primary safety concerns discussed by the panel. But regulators also emphasized “the approvable letter does not mean that Inamed’s device is approved for marketing in the U.S. at this time.”
Medicis has responded to Allergan’s offer, issuing a statement reaffirming its desire to complete the Inamed deal and that the company has a legally binding agreement.
Analysts see Inamed going to Allergan with Medicis,a much smaller company with a recent market value of around $1.5 billion as opposed to Allergan’s $13.2 billion,backing away from a bidding war.
Allergan’s “moving very rapidly” on Inamed, Ingram said, and is hoping to get a deal done by January.
Bits and Pieces:
I-Flow Corp., Lake Forest, said that its On-Q, a system that provides non-narcotic pain relief after surgeries, was featured during five presentations at the American Society of Anesthesiologists’ annual meeting in Atlanta Betsy Tarbell of Tarbell Realtors, Santa Ana, and Susan Parks, chief executive of WalkStyles Inc., Laguna Hills, are among the presenters at The Wellness Community-Orange County’s annual luncheon Dec. 6 at the Hyatt Regency Irvine. Information: (714) 543-3327 Doctors Telehealth Network, Newport Beach, said that it would start offering telephone and Internet-based healthcare technology in California. The company now operates “telemedicine” programs in Pennsylvania.
