- Moving quickly after the collapse of a mega-merger with Pfizer, Allergan signed a potentially $3.3 billion licensing deal with Heptares Therapeutics for rights to group of developmental treatments for Alzheimer's and other neurological disorders.
- Allergan will pay Heptares $125 million upfront, with $665 million in clinical development milestones and a further $2.5 billion in sales milestones.
- Earlier this week, Pfizer and Allergan called off their $160 billion merger after the U.S. Treasury issued new rules which made it more difficult for companies to complete corporate inversion deals.
In a call with investors after the termination of the Pfizer merger, Allergan CEO Brent Saunders had expressed confidence the company would continue to add to its pipeline through open science acquisitions. While this deal was likely in development for some time, the timing of its completion is a clear sign Allergan is ready to build on its own strategy as a standalone company.
Under the agreement with Heptares, Allergan will be responsible for development of the compounds from the initiation of Phase 2b studies on, including manufacturing and commercialization. Heptares already has two M1 muscarinic M1 receptor agonists currently in Phase 1 development. Allergan also gained rights to a broader portfolio of M1, M4, and M1/M4 agonists.
M1 agonists are designed to help treat cognitive deficiencies in Alzheimer's patients, while the M4 compounds target psychoses associated with the disease.
"The Heptares M1 compounds have shown promising results in early development in their ability to selectively target the M1 receptor without also activating the M2 or M3 receptors, which are associated with undesirable side effects. We look forward to advancing these compounds into the next stages of development," said David Nicholson, president of Global Brands R&D at Allergan.
Heptares is a wholly-owned subsidiary of the Japanese Sosei Group Corporation, which bought Heptares in February 2015.
Post-Pfizer, many are expecting Allergan to be more aggressive on the acquisition front, especially after its $40.5 billion deal sale of its generics business to Teva closes. The deal is currently under review by the U.S. Federal Trade Commission, and is expected to pass review sometime in June. Allergan has said the sale will result in approximately $36 billion in net cash and equity proceeds after tax.
When that happens, Allergan will have more financial muscle to build out its pipeline in its seven core therapeutics areas, and perhaps pursue a transformative M&A deal.