In a bid to strengthen its position in the neurology and
migraine specialty fields,
) recently inked a deal with
MAP Pharmaceuticals, Inc.
) to acquire the latter. As per the terms of the deal, Allergan
will acquire all the shares of MAP Pharmaceuticals for $25.00 per
The offer price represents premium of 60% over MAP
Pharmaceuticals' closing price on Jan 22, 2012. The deal is
expected to be worth approximately $958 million. The transaction,
which has been cleared by the boards of directors of both
companies, is expected to close either towards the end of the
first quarter or in the second quarter of 2013.
ALLERGAN INC (AGN): Free Stock Analysis
LILLY ELI & CO (LLY): Free Stock Analysis
MAP PHARMACEUT (MAPP): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
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The acquisition will give Allergan sole rights of migraine
candidate Levadex in the US. Levadex is currently under
regulatory review for treatment of adults suffering from acute
migraine. The US Food and Drug Administration is expected to
render a decision on the approval of the candidate by Apr 15,
We note that Allergan and MAP Pharmaceuticals are no strangers to
each other. In Jan 2011, both the companies entered into an
agreement to develop and commercialize Levadex.
Assuming the approval of Levadex, Allergan expects that the
purchase of MAP Pharmaceuticals to be accretive to its earnings
by the second half of 2014. The deal is expected to negatively
impact Allergan's 2013 earnings by 7 cents per share. Currently,
the 2013 Zacks Consensus Estimate is pegged at $4.75 per share.
We are positive on Allergan's decision to buy MAP Pharmaceuticals
.We believe that if Levadex manages to gain approval then it will
be a major boost for Allergan and complement the company's
portfolio, which includes Botox (onabotulinumtoxinA). Botox is
indicated for several indications including treatment of chronic
migraine headache. Additionally, label expansion plans of Levadex
are also on the cards.
However, we remain concerned about the below-par performance of
the obesity intervention segment at Allergan over the past few
quarters. The company is considering a potential sale of the
obesity intervention segment as an option in its efforts to
maximize the returns from this business.
Allergan was in news recently when the FDA approved Botox for the
treatment of patients suffering from overactive bladder with
symptoms of urge urinary incontinence, urgency and frequency.
While we view the approval of Botox for the treatment for OAB as
a major positive for Allergan, we remain concerned about Botox's
sales post the re-entry of Merz Pharmaceuticals Xeomin in the
market. In Mar 2012, an injunction against Xeomin was issued,
which was valid till Jan 9, 2013.
Allergan carries a Zacks Rank #3 (Hold) in the short run. Pharma
companies that currently look better-positioned include
). Both are Zacks Rank #2 (Buy) stocks.