Actavis plc (ACT), which has consistently been in the news for its acquisition strategy, has struck yet another deal. This time around, Actavis will be acquiring pharmaceutical company Durata Therapeutics, Inc. (DRTX), which is focused on the development and commercialization of novel therapeutics for patients with infectious diseases and acute illnesses.
Acquisition Will Add Dalvance to Actavis’ Portfolio
With this acquisition, Actavis will boost its infectious disease portfolio through the addition of Dalvance. Dalvance gained FDA approval earlier this year – it is the first and only IV antibiotic for acute bacterial skin and skin structure infections (ABSSSI) with once-a-week dosing for two weeks. Dalvance was approved as a Qualified Infectious Disease Product (QIDP) which means it will enjoy an additional five years of marketing exclusivity.
Dalvance is currently under review in the EU with a decision expected in the first half of 2015. Meanwhile, a single-dose regimen of Dalvance is being studied with a supplemental New Drug Application (sNDA) expected to be filed by mid-2015. Dalvance also has the potential to be studied for additional indications like hospitalized community-acquired pneumonia and pediatric osteomyelitis.
Deal Valued at $675 Million Plus CVRs
Actavis will acquire all outstanding shares of Durata for $23 per share in cash or about $675 million. Additionally, holders of contingent value rights (CVRs) will get cash payments of up to $5 per share from Actavis on the achievement of certain regulatory or commercial milestones related to Dalvance.
Dalvance’s EU approval for ABSSSI would entitle CVR holders to $1 per share. FDA approval of the single dose administration would entitle CVR holders to $1 per share. Meanwhile, the achievement of a net global Dalvance revenue threshold over a certain time period will entitle the CVR holders to $3 per share. Durata’s shares were up 74.6% on the deal.
Our Take
The Durata acquisition, which is slated to close later this year or early next year, is a smart strategic move by Actavis. Actavis has been on an acquisition spree over the past few quarters having successfully completed three big deals. The decision to acquire Durata is in line with the company’s strategy of building its branded product portfolio and will be especially beneficial for its infectious disease portfolio which currently consists of Teflaro and pipeline candidate ceftazidine-avibactam.
The Durata acquisition is expected to be accretive by the end of the first year. Actavis is a Zacks Rank #1 (Strong Buy) stock. Other well-ranked stocks in the health care sector include Mallinckrodt (MNK) and Supernus Pharmaceuticals, Inc. (SUPN). While Mallinckrodt is a Zacks Rank #1 stock, Supernus is a Zacks Rank #2 (Buy) stock.
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