Santa Ana’s Advanced Medical Optics Inc., which is looking to buy rival Bausch & Lomb Inc. for $4.3 billion (see story, page 1), has seen an activist hedge fund make its presence known at the company.
San Francisco-based ValueAct Capital Partners LP, Advanced Medical’s third-largest shareholder, faced off with Chief Executive Jim Mazzo last week over the Bausch & Lomb bid.
In a letter, Mazzo said he was “surprised and disappointed” by ValueAct’s opposition, which was “hard to understand” given that the hedge fund earlier expressed interest in helping to finance the deal.
ValueAct, in a regulatory filing, said it plans to vote against Advanced Medical’s takeover bid for Bausch. It also sent a letter to Mazzo saying that the deal would reduce its returns and doubted Advanced Medical could integrate Bausch.
The hedge fund, known as an activist investor that urges companies to make changes aimed at boosting a company’s value, now holds about 8.8 million shares, or 14.8% of the eye device and contact lens care maker.
Since June 22, ValueAct has upped its stake in Advanced Medical from 9.9%.
FMR Corp.’s Fidelity and MFS Investments are Advanced Medical’s largest shareholders.
Rochester, N.Y.-based Bausch said last week it remains in talks with Advanced Medical, though a rival $3.67 billion bid by private equity firm Warburg Pincus LLC has received regulatory clearance.
Advanced Medical’s stock has fallen about 10.5% in the past three months amid a voluntary recall of its Complete MoisturePlus contact lens solution in the wake of reports linking its usage to a rare eye infection.
The company had a recent market value of $2 billion.
ValueAct manages some $1.5 billion on behalf of institutional and wealthy investors.
In the past, the firm invested in TriZetto Group Inc., a Newport Beach maker of healthcare software. It’s the second largest shareholder in Reuters PLC, which Canadian publisher Thomson Corp. is seeking to buy for $17 billion.
Avanir Selling Drug for $42M
Avanir Pharmaceuticals Inc., an Aliso Viejo drug maker, is selling its FazaClo schizophrenia drug for $42 million to Azur Pharma Ltd. of Ireland.
Avanir’s shares, which have a market value of about $115 million, jumped on early word of the sale.
The company is selling FazaClo to shift focus to Zenvia, its drug candidate to treat involuntary emotional expression disorder. It will use $11 million of the sale’s proceeds to pay down debt.
Azur also agreed to pay Avanir up to another $10 million if FazaClo meets certain sales goals.
Avanir has seen costly regulatory setbacks with Zenvia, including a Food and Drug Administration request for more data in October.
ICU Hit with Legal Bill
ICU Medical Inc., a San Clemente device maker, said a federal court ordered it to pay Alaris Medical Systems Inc., a unit of Cardinal Health Inc., $4.8 million in fees and costs related to a lawsuit.
The order resulted from Alaris’ request for legal fees after the dismissal of ICU’s claim of patent infringement against Alaris. ICU said in a statement that it will record a charge for the amount of the judgment in its second-quarter results.
ICU originally sued Alaris in 2004 over claims that Alaris infringed ICU’s patents in the making of its SmartSite and SmartSite Plus needle-free valves. SmartSite and SmartSite Plus, when opened, can deliver drugs, blood and other fluids to and from a patient through intravenous tubing.
A federal court found that Alaris didn’t infringe upon ICU’s patents in 2006.
ICU had sought an injunction against Alaris, damages and legal fees.
Spectrum Gets Nod
Irvine-based Spectrum Pharmaceut-icals Inc.’s Satraplatin drug candidate is helped by the company’s partnership with Japanese drug maker Yakult Honsha Co., one analyst believes.
Megan Murphy of Lazard Capital Markets, in keeping a “buy” rating on Spectrum, said Germany’s GPC Biotech AG, Spectrum’s development partner for Satraplatin, would receive a $10 million upfront payment, additional regulatory milestone payments and a minimum of 21% royalty on Japanese sales in a deal with Yakult.
GPC and Spectrum are in arbitration with each other over several claims, including Spectrum management’s belief that it’s entitled to $12 million of money received by GPC through the latter’s partnership with Pharmion Corp. in Europe.
Shortly afterwards, Paul Noglows, Lazard’s research director, said he expects regulators to approve Satraplatin by Aug. 15 as a second-line treatment for hormone refractory prostate cancer, and that the drug maker could see royalties reach $50 million by 2011 for that usage alone.
Bits and Pieces:
Valeant Pharmaceuticals International of Aliso Viejo settled a lawsuit with Kali Laboratories Inc., a generic drug maker, over alleged patent infringement. The settlement calls for Valeant to allow Kali to roll out a generic version of Diastat and Diastat AcuDial, an at-home treatment for epileptic seizures, no later than September 2010. Xcel Pharmaceuticals Inc., which Valeant bought in 2005, originally filed suit against Kali in 2004 Tustin-based Peregrine Pharmaceuticals Inc. started a clinical trial for Cotara, a treatment for glioblastoma multiforme, a brain cancer. The trial is taking place in India. Peregrine also said that Cotara is in a dosimetry and dose confirmation trial in glioblastoma patients at a number of U.S. academic brain cancer centers.
