) announced that it has completed the sale of its obesity
intervention business. The obesity intervention business was sold
to Apollo Endosurgery, Inc. for an up-front cash payment of $75
million and a $15 million minority equity interest in Apollo.
Additional considerations include contingent payments of up to
$20 million based on the achievement of certain regulatory and
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We remind investors that on Oct 29, 2013, along with its third
quarter 2013 results, Allergan announced that it had entered into
a definitive agreement with Apollo for the sale of its obesity
Allergan's erstwhile obesity intervention business comprised
several weight loss treatments including Lap-Band, an adjustable
gastric banding system and the Orbera intra-gastric balloon
The company has classified the obesity intervention business
under discontinued operations since the first quarter of 2013.
Allergan's board of directors after evaluating several strategic
options for maximizing the value of their business decided to
sell off this unit.
The obesity intervention segment has performed disappointingly
over the past few years. Sales declined 21.5% in 2012. The
obesity market is getting very competitive. Last year, two new
obesity drugs - Belviq and Qnexa - were approved. Other companies
are also developing candidates targeting the lucrative obesity
market. Sale of the struggling business unit will enable the
company to focus on its areas of strength.
Allergan carries a Zacks Rank #3 (Hold). Some better-ranked
). While Actelion and Jazz Pharma carry a Zacks Rank #1 (Strong
Buy), Bayer holds a Zacks Rank #2 (Buy).