* To pay $95/share in cash, $30/share in milestone payment
* Furiex shares rise about 30 pct
(Adds conference call details, updates shares)
By Esha Dey
April 28 Forest Laboratories Inc said it
would buy Furiex Pharmaceuticals Inc for up to $1.46
billion, including milestone payments, to add a promising
treatment for irritable bowel syndrome to its gastrointestinal
Forest will pay about $95 per share in cash to Furiex
shareholders and up to $30 per share as contingent value rights.
Furiex's shares rose about 30 percent to $104.56 in morning
The acquisition is the latest of several multi-billion
dollar healthcare deals and offers announced over the past week
as the industry goes on a shopping spree to either gain scale or
pick up expertise in specific disease areas.
Forest, which itself is being acquired by Actavis Plc
, said it expected Furiex's lead drug, eluxadoline, to be
"very complementary" to its own bowel drug Linzess.
Eluxadoline, being developed to treat diarrhea-predominant
irritable bowel syndrome, significantly alleviated symptoms of
the disease in two large late-stage trials.
Linzess, on the other hand, is already approved to treat
irritable bowel syndrome with constipation. Between the two,
Forest will be able to cover the two most common subtypes of
irritable bowel syndrome.
"(Eluxadoline) really is the flip side of the same coin of
Linzess, so we are the perfect owner of this asset," Forest
Chief Executive Brent Saunders said on a conference call.
Furiex is on track to submit a marketing application for
eluxadoline by the end of the third quarter of 2014.
Forest, which plans to use cash on hand to fund the
acquisition, said it would sell Furiex's royalties on diabetes
drug alogliptin and premature ejaculation treatment Priligy to
New York-based Royalty Pharma for about $415 million upon
completion of Furiex acquisition.
"Our partnership with Royalty Pharma will allow us to expand
our (gastrointestinal) franchise in a capital-efficient manner,
preserving Forest capital to be deployed to areas which are core
to Forest," Saunders said.
The divestment is expected to cut its purchase price by
about $315 million after tax, Forest said.
The contingent value right of the deal would be dependent on
the drug achieving certain designations given by the U.S. Food
and Drug Administration following its approval.
Forest said it expected the Furiex deal to close in the
second or third quarter of 2014 and said it would not affect the
timing of the Forest-Actavis acquisition.
Generic drugmaker Actavis said in February that it would buy
Forest for about $25 billion to gain higher-margin, branded
treatments for Alzheimer's, hypertension and other disorders.
Furiex was advised by BofA Merrill Lynch, Credit Suisse,
Kirkland & Ellis LLP and Wyrick Robbins Yates & Ponton LLP.
Covington & Burling LLP was Forest's legal counsel, while
Royalty Pharma was advised by Goodwin Procter LLP.
Forest shares were marginally up at $90.04.
(Editing by Don Sebastian and Sriraj Kalluvila)