Pfizer in Deal to Acquire NextWave
October 22, 2012 - The Wall Street Journal
Pfizer Inc. PFE -0.70%on Monday said it plans to acquire the developer of a drug for attention-deficit/hyperactivity disorder in a deal potentially valued at up to $700 million.
The deal gives Pfizer an entry into an ADHD treatment market in which Shire SHPG -1.34%PLC and Johnson & Johnson JNJ -0.34%have had success with branded drugs but also face competition from low-price generics. The deal is part of a strategy to expand Pfizer's established-products unit partly by selling new, branded formulations of older drugs.
Pfizer, like many of its rivals, has been aiming to build up its product pipeline amid an industrywide wave of patent expirations. The company has seen lower sales since its cholesterol fighter Lipitor lost U.S. market exclusivity late last year.
Pfizer said it is exercising an option to acquire NextWave Pharmaceuticals, a closely held firm and developer of a new liquid ADHD drug called Quillivant XR. The drug was approved by the U.S. Food and Drug Administration in September and is expected to be available in pharmacies in January.
Pfizer had previously entered into an option and merger agreement with NextWave during the second quarter and made an option payment of $20 million.
Now Pfizer is exercising the option to acquire NextWave and will make a payment of $255 million to NextWave shareholders at the close of the deal. NextWave shareholders are eligible to receive additional payments of up to $425 million if certain sales milestones are met.
Quillivant XR is the first once-daily, extended-release formulation of liquid methylphenidate, and is designed to help increase attention in patients with ADHD. Various forms of methylphenidate are found in other ADHD drugs such as Ritalin and Concerta. The liquid formulation is intended for patients who have difficulty swallowing pills or capsules.
The drug was developed using drug-delivery technology from a partner company, Tris Pharma. NextWave holds exclusive North American commercialization rights to Quillivant XR.
NextWave also is developing a chewable tablet formulation of methylphenidate, according to its website.
Pfizer expects the deal to close in the fourth quarter, subject to U.S. regulatory approval and customary closing conditions.
Pfizer's financial adviser for the transaction was Jefferies & Co. Kaye Scholer LLP and Ropes & Gray LLP acted as legal counsel. NextWave's financial adviser for the transaction was Aquilo Partners L.P., while Cooley LLP served as its legal adviser.