- Allergan on Tuesday snapped up San Francisco-based Tobira Therapeutics in a deal worth up to roughly $1.7 billion, continuing to build on its "stepping stone" strategy of pipeline development.
- Allergan will pay a high premium for Tobira, which has two treatments for non-alcoholic steatohepatitis (NASH) currently in clinical testing. Allergan's upfront payment of $28.35 per share is roughly six times the average of Tobira stock's closing price over the last 30 days. Another $49.84 per share in contingent value rights would be triggered by successful completion of certain milestones.
- NASH is a hot therapeutic area for biopharma development, with a number of biotech companies in mid- to late-stage testing for drugs treating the fatty liver disease. Earlier this year, Gilead paid $400 million upfront to acquire Nimbus Therapeutics' NASH drug — with another $800 million in milestones.
Allergan has had a busy two months. Since August, the Irish drugmaker has acquired two small eye-care companies — ForSight Vision5 and Retrosense Therapeutics — along with dermatology company Vitae Pharmaceuticals. All told, Allergan has put up $1.33 billion in upfront payments to buy the four companies, although undisclosed milestone payments in three of the deals could drive that figure significantly higher.
In the wake of the failed mega-merger with Pfizer, Allergan CEO Brent Saunders has emphasized an M&A strategy characterized by "stepping stone" deals and a focus on building out the company's pipeline in its seven core therapeutic areas.
The deal for Tobira gives Allergan access to two NASH-related drugs: cenicriviroc (CVC), an oral immunomodulator aimed at inhibiting two chemokine receptors, and evogliptin, a DPP-4 inhibitor which Tobira hopes can complement CVC in treating NASH.
In July, however, Tobira announced CVC failed to meet its primary endpoint in a Phase 2b trial, sending shares down by 60%. The results did show treatment with CVC led to a statistically significant improvement in fibrosis of at least one stage without worsening NASH at the same — hitting one of the two secondary endpoints.
One in 5 patients in the treatment arm saw such an improvement, compared to one in 10 given a placebo.
The success on this measure led Tobira to press ahead with development and continue with plans for a pivotal Phase study in 2017. Allergan will now take that challenge on.
Saunders pointed to the growing prevalence of metabolic conditions in the U.S. in explaining Allergan's logic for the deal. "NASH is set to become on of the next epidemic-level chronic diseases we face as a society," Saunders said.
"With this acquisition, Allergan will now have one of the strongest portfolios of development stage programs for the treatment of NASH, with Cenicriviroc as the cornerstone."
The premium paid by Allergan for Tobira also lifted the fortunes of other biotech companies in the NASH space. Conatus Pharmaceuticals and Galectin Therapeutics both jumped more than 15% in morning trading Tuesday, with Regulus Therapeutics and Intercept Pharmaceuticals notching smaller gains.
Allergan expects the deal to close by the end of this year.