AstraZeneca to Pay up to $443 Million to Acquire Omthera Pharmaceuticals

On the heels of Valeant Pharmaceuticals (VRX) agreeing to pay $8.7 billion to buy Bausch & Lomb on Monday, a smaller biotech deal was announced Tuesday morning.  British drug maker AstraZeneca PLC (AZN) said it has agreed to terms to acquire New Jersey-based Omthera Pharmaceuticals Inc. (OMTH) as it looks to continue to strengthen its cardiovascular drug franchise and rebuild its product pipeline.

In April, MedImmune, AstraZeneca’s biologics research and development arm, acquired Ann Arbor, Michigan-based AlphaCore Pharma, a company focused on the early-stage development of ACP-501, a recombinant human LCAT enzyme for the management of HDL cholesterol.

AstraZeneca will pay $12.70 per share (about $323 million) for Omthera, giving the transaction an enterprise value of approximately $260 million after incorporating Omthera’s cash balances of about $63 million.  The acquisition price represents an 87.6-percent premium to the $6.77 closing price of shares of OMTH on Friday.

Further, Omthera shareholders will receive Contingent Value Rights of up to $4.70 per share (about $120 million) if specific milestones are met related to Omethera’s flagship investigational product Epanova, bringing the total deal value to approximately $443 million.

Pending all necessary approvals, the transaction is expected to close in the third quarter.  Omthera’s board has recommended shareholders approve the deal.

Epanova is a novel omega-3 free fatty acid composition derived from fish oils that Omthera is developing under a Special Protocol Assessment from the FDA for treatment of people with very high triglycerides, blood fat that is bad for the cardiovascular system.  Phase III safety and efficacy trials have been completed showing Epanova can have a positive impact on lowering very high triglycerides and reduce non-HDL cholesterol in combination with a statin.  AstraZeneca plans to initiate a large-scale cardiovascular outcomes trial for Epanova in combination with statins.

Omthera expects to file a New Drug Application with the Food and Drug Administration in the coming months for patients with triglyceride levels above 500 mg/dL.  AstraZeneca now plans to file a supplemental NDA for Epanova as a treatment for patients with mixed dyslipidemia (triglyceride levels of 200-499mg/dl), as well as in a fixed dose combination with its blockbuster drug Crestor® for mixed dyslipidemia patients at high risk of a cardiovascular event.  The company is looking for ways to extend its patent protection of Crestor, which expires next year.

AstraZeneca’s quarterly sales have been falling for more than one year, in part because of losing patent protection of antipsychotic drug Seroquel and increasing generic competition.

The acquisition fervor is part of AstraZeneca’s $2.3 billion restructuring initiatives unveiled by new CEO Pascal Soriot to rebuild its struggling research and development operations.  In March, the U.K.’s second biggest biotech said that it is implementing a plan to improve its pipeline performance, including laying-off about 1,600 staffers, relocating other scientists, closing its Alderley Park research center, investing $500 million in a new complex in Cambridge, U.K. and more.

Shares of OMTH gapped ahead to $13.31 to start Tuesday trading and are holding in that area.  Shares of AZN have jumped ahead on the news as well; trading up by 2.5 percent at $53.45, representing an all-time high for the stock price.