Allergan PLC, amid reports that it is looking to separate its
hefty generic drug business in a different $45 billion deal, said
Sunday that it has agreed to buy for $560 million cash upfront a
privately held developer of treatments for depression.
Allergan's deal for Naurex Inc., based in Illinois, is the
latest for the Ireland-based company, aided in part by lower
interest taxes. Allergan is among the companies with an overseas
tax address that use their lower tax rate to purchase companies
that would have otherwise paid higher U.S. corporate taxes.
The deal for Naurex comes as Allergan is in talks to combine its
big generic-drug business with Israeli drug maker Teva
Pharmaceutical Industries Ltd., as The Wall Street Journal reported
Sunday.
The Teva deal, valued at about $45 billion, could be announced
as early as Monday, according to people familiar with the matter.
The Allergan unit would be spun off and combined with Teva, already
the world's biggest seller of generic medicines with a market value
of $60 billion, one of the people said.
For Allergan, the Teva deal allows it to focus more on lucrative
brand-name drugs. Actavis was renamed Allergan earlier this year,
after doing $100 billion in deals last year that gave it brand-name
drugs, notably wrinkle fighter Botox.
But the deal had swollen Allergan's debt to about $44.3 billion
as of March 31. A deal with Teva also would help Allergan pay down
its debt and, combined with the $8 billion-a-year it generates in
cash, add higher-profit prescription drugs.
On Sunday, in announcing the Naurex news, Allergan reiterated
that it remains committed to reducing its debt levels to 3.5 times
adjusted earnings before interest, taxes, depreciation and
amortization by the end of the first quarter of 2016, down from 4.1
times earlier this year.
Naurex has a once-weekly intravenous treatment for depression
that showed efficacy in mid-stage studies and is being prepared for
late-stage trials, which are usually needed before regulatory
approval. The company also has an oral depression treatment in
early-stage testing.
Both drugs target the brain's N-methyl-D-aspartate receptors,
which are involved in learning and memory. These receptors interact
with the neurotransmitter glutamate, the levels of which seem to be
out of balance in depression.
According to Allergan, both therapies have been well-tolerated
in studies to date, with no serious drug-related adverse events or
any of the side effects typically seen with NMDA antagonists, such
as hallucinations and other "dissociative" feelings that have led
some of these treatments to be abused as a street drug.
Allergan said the deal's value could rise because of future
milestone payments based on potential research or sales success.
The company expects the Naurex deal to close by the end of
2015.
Write to George Stahl at george.stahl@wsj.com
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