Teva to acquire Auspex Pharmaceuticals for $3.5 billion

JERUSALEM & LA JOLLA, Calif.—Teva Pharmaceutical Industries Ltd. has announced the signing of a definitive merger agreement with Auspex Pharmaceuticals Inc., under which it will launch a tender offer for all outstanding shares of Auspex common stock at $101 per share in cash, for a total consideration of approximately $3.2 billion in enterprise value and roughly $3.5 billion in equity value. Both companies' boards of directors have approved the transaction, and certain of Auspex' key shareholders have signed agreements indicating their support for the deal.

An affiliate will commence a tender offer for all of Auspex' outstanding shares at $101 per share in cash, and once the tender offer is completed, any shares not tendered to the offer will be acquired through a second-step merger at the same share price. The transaction is subject to customary closing conditions, and is expected to close in mid-2015.

"The acquisition of Auspex is a significant step in strengthening Teva’s leadership position in CNS and advances us into underserved movement disorder markets. We look forward to accelerating the development and commercialization of the Auspex portfolio based on our infrastructure, capabilities and strong commercial and R&D position in CNS,” Erez Vigodman, president and CEO of Teva, said in a press release. “As we have outlined recently, one of our key priorities for 2015 is to support Teva’s mid- to long-term growth and create value for our shareholders with business development opportunities that are closely aligned with our core therapeutic areas. This transaction represents a first major step with regards to that commitment, and we expect to continue this focus in the future.”

Auspex' focus is the application of deuterium chemistry to known molecules to create novel therapies that have improved safety and efficacy profiles. The company's lead investigational product is SD-809, which is being developed as a potential treatment for chorea associated with Huntington’s disease, tardive dyskinesia and Tourette syndrome. Auspex reported positive Phase 3 results for SD-809 in Huntington's disease last year, and intends to submit a New Drug Application in that indication by mid-2015. The U.S. Food and Drug Administration has granted SD-809 orphan drug designation in Huntington's disease.

“Teva has established itself as a global leader in CNS diseases, characterized by strong management and commercial execution," said Pratik Shah, Ph.D., President and CEO of Auspex. "Importantly, the Teva organization has a commitment to patients that matches our own in developing and commercializing treatments for patients who suffer from movement disorders. This transaction will enhance Auspex’s mission by bringing innovative therapies to patients across the world as quickly and efficiently as possible. The transaction also marks a great outcome for Auspex shareholders and stakeholders as it not only validates our portfolio of drug candidates while delivering significant financial return, but it also puts our programs into the hands of a company that has the experience and commitment to deliver our pipeline of therapies to patients in need.”

Teva expects this deal to start boosting revenues in 2016, the anticipated launch date for SD-809 in Huntington's disease, and to be accretive to non-GAAP earnings per share starting in 2017, with minimal dilution to non-GAAP earnings per share in the second half of 2015 and 2016.

SOURCE: Teva press release