Israel's Teva Pharmaceutical Industries Ltd (TEVA.TA) (TEVA.N) offered to buy U.S. neurology drugs maker NuPathe Inc PATH.O for $114 million plus milestone payments related to NuPathe's Zecuity migraine treatment.
Teva's offer of $3.65 per share comes less than a month after Endo Health Solutions Inc (ENDP.O) said it would buy NuPathe for about $105 million, or $2.85 per share, plus milestone payments.
Both Endo and Teva are offering NuPathe up to $3.15 per share in milestone payments related to Zecuity.
Excluding milestone payments, Teva's offer represents a premium of 13 percent to NuPathe's Tuesday close.
NuPathe shares were up 37 percent at $4.42 in late morning trading on Wednesday.
"After review and discussion, the company board determined that the Teva proposal is reasonably expected to lead to a superior proposal," NuPathe said in a filing, adding that it planned to discuss the offer with Teva.
However, analysts said that while Teva offered more up front, its milestone payments were based on Zecuity sales levels that were unlikely to be reached.
Teva's offer would give NuPathe shareholders 85 cents per share when annual sales of Zecuity reach $100 million, another $1.00 when sales reach $300 million and $1.30 more when sales hit $450 million.
Under the Endo offer, NuPathe shareholders would receive $2.15 per share when Zecuity sales exceed $100 million. The rest would be earned if sales exceed $300 million.
"I almost feel like (Teva's final milestone) is out there just for fun, because I don't really believe (Zecuity is) going to get to $450 million," Stifel Nicolaus and Co analyst Annabel Samimy said.
"In terms of certain sales, I think Endo wins. In terms of the next tier, I think that is where the uncertainty comes in."
Zecuity, approved in the United States last January, is the only prescription migraine patch approved by the U.S. Food and Drug Administration. Its sales are estimated to reach about $181 million by 2018, according to Thomson Reuters data.
The single-use, battery-powered patch delivers a commonly used migraine drug, sumatriptan, to treat both headaches and migraine-related nausea.
Applied to the upper arm or thigh during a migraine attack, it delivers a 6.5 mg dose of sumatriptan through the skin over four hours.
Migraine headaches, a neurological disorder, affect about 12 percent of the U.S. population.
Analysts have said Zecuity could be a strategic fit for Teva and Endo, both of which offer multiple pain treatments.
Endo was not immediately available for comment.
(Reporting by Esha Dey in Bangalore; Editing by Don Sebastian and Saumyadeb Chakrabarty)