Tags: Ireland | Endo | Drugmaker | Auxilium

Ireland's Endo Bids $2.2 Billion for Drugmaker Auxilium

Tuesday, 16 Sep 2014 06:31 PM

Endo International Plc, a Dublin-based manufacturer of pain drugs, said it made a $2.2 billion cash-and-stock offer for Auxilium Pharmaceuticals Inc. that would halt a tax-inversion deal Auxilium made for another drugmaker.

Endo bid $28.10 a share, a 31 percent premium to Auxilium’s closing price Tuesday. Auxilium, based in Chesterbrook, Pa., makes men’s health medicines, including testosterone supplements.

Shares of Auxilium gained 43 percent to $30.85 in extended trading at 5:49 p.m. in New York after closing at $21.52. Endo shares rose 4 percent to $67.80, while QLT shares fell 7.4 percent to $5.74.

“It’s a very natural fit,” Annabel Samimy, a New York-based analyst at Stifel Nicolaus & Co., said in a telephone interview. “Endo is in the urology space already, and they have additional capacity in their sales infrastructure for more.”

Auxilium said in June it had an agreement to take control of biotechnology firm QLT Inc. in a $345 million stock deal that would move its tax address to Canada. The purchase hasn’t yet closed, and Endo said its offer didn’t include the deal for QLT.

Auxilium’s testosterone products include Testim, a topical gel, and Testopel, a pellet that is embedded under the skin. Together, they generated $271 million last year.

Auxilium last week said it would cut costs, eliminate 30 percent of its jobs and improve its debt position following a decline in the testosterone market. The company said it would trim annual operating expenses by at least $75 million.

Strategic Alignment

“This transaction is well aligned with Endo’s strategy to pursue accretive, value-creating organic growth opportunities,” Endo Chief Executive Officer Rajiv De Silva said in a statement. He called the deal a “compelling strategic combination,” citing the growth potential of Auxilium’s drug Xiaflex.

In December, U.S. regulators approved the expanded use Xiaflex to treat men with abnormal curvature of the penis caused by a buildup of scar tissue. About 120,000 men a year are diagnosed with the condition, Auxilium has said. Xiaflex sold $29 million in the second quarter of this year. It was originally approved for a disorder of clenched hands.

While Auxilium may “consider trying to get more value” based on the potential market for Xiaflex, “I think it’s a fair price,” said Stifel’s Samimy.

Endo called for Auxilium’s management to enter talks toward a deal and said it will fund the purchase through existing cash on hand and debt financing. The company agreed this year to pay $830 million to resolve about 20,000 lawsuits alleging its vaginal-mesh inserts eroded in some women and left them incontinent and in pain.

Calls and e-mails to Auxilium spokeswoman Keri Mattox weren’t returned.

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Endo International Plc, a Dublin-based manufacturer of pain drugs, said it made a $2.2 billion cash-and-stock offer for Auxilium Pharmaceuticals Inc. that would halt a tax-inversion deal Auxilium made for another drugmaker.
Ireland, Endo, Drugmaker, Auxilium
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2014-31-16
Tuesday, 16 Sep 2014 06:31 PM
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