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October 6, 2014

Actavis to Acquire Durata for $675M+

  • Actavis plans to acquire Durata Therapeutics for $675 million-plus, the companies said today, in a deal that broadens the buyer’s portfolio with the already-marketed infectious disease drug Dalvance™ (dalbavancin)—and continues Actavis’ acquisition spree of recent years, anchored by its purchase of Forest Laboratories, completed July 1 for approximately $28 billion.

    Pending approvals, Actavis said it anticipates closing the acquisition in late 2014 or early 2015. Once that happens, Durata will merge with and become a subsidiary of Actavis, while Durata's shares will be delisted from NASDAQ.

    Dalvance won FDA marketing approval on May 23 for acute bacterial skin and skin structure infections (ABSSSI) caused by susceptible Gram-positive bacteria, including methicillin-resistant Staphylococcus aureus (MRSA). Dalvance was the first new drug approved by FDA as a Qualified Infectious Disease Product (QIDP)—a designation that entitles recipient drug developers to faster FDA reviews and five additional years of market exclusivity.

    The QIDP designation was created by the Generating Antibiotic Incentives Now (GAIN), a series of antibiotic drug incentives folded into the Food and Drug Administration Safety and Innovation Act (FDASIA)—the formal name for the fifth authorization of the Prescription Drug User Fee Act enacted in 2012.

    The incentives were designed to reverse years of big pharma disinvestment in antibiotics—the trend reflected when Pfizer stopped development of dalbavancin after the FDA turned down the pharma giant’s application for the drug. Two years after that rejection, in 2009, Durata obtained rights to dalbavancin by acquiring Vicuron Pharmaceuticals from Pfizer, then resumed development based on talks with the FDA in June 2010 as well as anticipation of the publication of new FDA draft guidance for the study of ABSSSI.

    The European Medicines Agency is reviewing a Marketing Authorization Application (MAA) for the drug under the name dalbavancin, with a decision anticipated in the first half of 2015.

    In addition, Durata plans to continue developing Dalvance for additional indications, such as hospitalized community-acquired pneumonia and pediatric osteomyelitis.

    “The acquisition of Durata is a strong strategic fit that strengthens Actavis' emerging infectious disease franchise and aligns with our stated goal to make smart, targeted investments that complement our existing businesses and position the Company for continued long-term growth," Brent Saunders, Actavis’ CEO and president, said in a statement. “Actavis will be in an enviable position to offer innovative solutions to physicians while providing value to hospitals and healthcare systems in advancing the treatment of patients in the outpatient and inpatient settings."

    That value, Actavis reasons, comes from Dalvance’s potentially less costly approach to the treatment of serious skin infections by allowing patients, healthcare professionals and hospitals to move beyond standard daily or twice-daily IV antibiotic infusions. Dalvance is indicated for once-a-week dosing for two weeks.

    Actavis agreed to buy Durata for $675 million upfront or $23 per share, plus contingent value rights of up to an additional $5 per share—$146.7 million if the shares were priced as they are today—tied to regulatory or commercial milestones for Dalvance. The $5 per share CVR consists of: 

    • An additional $1 per share if Dalvance is approved in Europe for ABSSSI.
    • Another $1 per share if the FDA grants additional approval to Dalvance for single dose administration. A single-dose regimen in late-stage development for ABSSSI, with a supplemental NDA (sNDA) filing expected by mid-2015, the companies said.
    • Another $3 per share if a net global Dalvance revenue threshold is met over a designated time period, both undisclosed.

    “This transaction will provide Durata shareholders with a strong immediate return on their investment with meaningful longer-term opportunities to participate in the future upside of Dalvance through the CVRs,” added Durata CEO Paul R. Edick.

    The deal is subject to satisfaction or waiver of customary terms and conditions, including a stipulation that the tender offer consist of at least one share more than half of Durata’s outstanding common-stock shares on a fully-diluted basis.  The transaction is also subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.