A busy June for Teva

 

The deal between Teva and Allergan began last July, when the companies announced that Teva would acquire Allergan’s global generic pharmaceuticals business for $40.5 billion, consisting of $33.75 billion in cash and $6.75 billion in Teva stock, the latter of which comes to an estimated less than 10-percent ownership stake in Teva. Additionally, Allergan will retain 50 percent of Teva’s future economics from generic lenalidomide (Revlimid). The deal was unanimously approved by both companies’ boards of directors. Teva noted at the time that it expects the deal to be significantly accretive to non-GAAP earnings per share, including expected double-digit non-GAAP earnings per share accretion in 2016 and more than 20 percent accretion in the second and third years following the close of the transaction.

 

In an effort to comply with regulatory requirements related to the Allergan acquisition, Teva has been making a flurry of deals to divest various parts of its existing portfolio. In late June, the company signed an agreement with Mayne Pharma Group Limited under which the latter would acquire 37 approved and five FDA filed products from Teva for cash consideration of $652 million—the completion of that transaction was officially announced by Mayne Pharma on Aug. 3.

 

The Federal Trade Commission (FTC) required the divestiture. The completion of this deal was expected in conjunction with the closing of Teva’s acquisition, and was subject to FTC approval of the Allergan deal and Mayne Pharma’s acquisition of the portfolio. Teva and Mayne Pharma have been working together with the FTC since December 2015, and Mayne Pharma has established supply agreements with Teva for the manufacture of specific products not currently outsourced to contract manufacturing organizations for up to five years.

 

Just a day before that deal was announced, Teva also shared news that it had inked a strategic alliance agreement with Impax Laboratories Inc. through a Teva subsidiary for 12 controlled-release generic pharmaceutical products. The deal provides Teva with exclusive U.S. marketing rights and an option to acquire exclusive marketing rights in the rest of North America, South America, the European Union and Israel for five Impax products pending approval by the FDA; an option to acquire exclusive marketing rights to another Impax products awaiting FDA approval; three products under development; and three additional products to be mutually agreed upon. Per the terms of the transaction, Teva will pay Impax up to $22 million if certain milestones are reached, in addition to investing $15 million in Impax’ equity.

 

About two weeks prior, Sagent Pharmaceuticals Inc. announced that it had struck up a definitive agreement with Teva and Actavis LLC for the acquisition of a portfolio of five U.S. Abbreviated New Drug Applications (ANDAs), including Propofol Injectable Emulsion, 1%, for $40 million. The acquisition of the ANDAs is, like the Mayne Pharma deal, contingent on the closing of the Teva/Allergan transaction and approval by the FTC of Sagent as a buyer.

 

Another June deal was the agreement between Prasco Laboratories, Teva and Shire LLC, an indirect subsidiary of Shire plc, under which Prasco will acquire the rights to distribute Dextroamphetamine Saccharate, Amphetamine Aspartate Monohydrate, Dextroamphetamine Sulfate and Amphetamine Sulfate (Mixed Salts of a Single-Entity Amphetamine Product) Extended Release Capsules, CII, 5 mg, 10 mg, 15 mg, 20 mg, 25 mg, and 30 mg, the Authorized Generic (AG) version of Adderall XR Extended Release Capsules, CII. Prasco will immediately assume distribution of the product once the transaction closes.

 

The Teva/Allergan deal was originally expected to close in June, but in mid-July, the companies submitted a regulatory filing to extend the deadline for completing the deal to October as they wait for the U.S. antitrust review to be completed. According the filing, Allergan will be excluding Actonel and Carafate from the generics sale, as reported in Reuters. Erez Vigodman, CEO of Teva, remarked in a conference call that “We expect the closing of the … generics deal at any time now.” Teva commented in the call that it is looking at selling about $2.9 billion in assets this year.

 

The process is still ongoing as Teva works to secure regulatory approval, but it is seeing some progress across the pond. On March 10, the company announced that the European Commission had granted regulatory approval for the deal. Teva will be required to divest certain overlapping molecules in 24 European countries, other than the United Kingdom, Ireland and Iceland. In the U.K. and Ireland, Teva will divest a majority of the current Allergan generic business, which will be capable of manufacturing and marketing generic medicines. The remainder of Allergan’s generics U.K./Ireland business will be integrated with Teva’s operations in line with the global transaction. Teva will divest its generic business in Iceland while retaining the Allergan generics business.