Plug-and-play deal

Acute-care therapy developer Cubist Pharmaceuticals to acquire pain management specialist Adolor in deal valued at up to $415 million

Amy Swinderman
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LEXINGTON, Mass.—Expanding its commercial acute-care assets,biopharmaceutical company Cubist Pharmaceuticals Inc. last month initiated acash-tender offer to purchase all outstanding shares of Adolor Corp., an Exton,Pa.-based developer of prescription pain management products.
Under the tender offer—made by FRD Acquisition Corp., awholly owned subsidiary of Cubist—Cubist will acquire Adolor's shares for $4.25in cash, or approximately $190 million up front. The agreement also entitlesAdolor stockholders to receive additional contingent payment rights (CPRs) ofup to $4.50 for each share they own if certain regulatory approvals and/orcommercialization milestones are achieved for ADL5945, a treatment for chronicopioid induced constipation that is set to enter Phase III trials next year.
"The way this deal is structured, we have a goodrisk-sharing way to move the ADL5945 program forward," says Steve Gilman,Cubist's chief scientific officer. "This is a plug-and-play kind of addition toour sales and marketing organization in the United States, and presents theopportunity for significant revenues in the next few years."
In total, the transaction is valued at up to $415 million.The deal has been unanimously approved by both companies' boards of directorsof both companies and is expected to close in the fourth quarter.
Cubist calls the acquisition a "strategic fit … and thelatest milestone in what has been a transformational year for the company."Since its founding 1992, Cubist has been focused on the development andmarketing of novel acute-care therapies for use in hospitals and otheracute-care environments—for conditions like skin and bloodstream infections andendocarditis—an area of discovery and development that most pharmaceuticalcompanies have abandoned.
That unique market position has generated nearly $700million in sales in the United States for Cubicin, a only once-dailyintravenous bactericidal antibiotic for the treatment of complicated skin andskin structure infections caused by susceptible strains of Gram-positive microorganismslike Staphylococcus aureus (includingmethicillin-resistant strains, also known as MRSA), Streptococcus pyogenes, S. agalactiae, S. dysgalactiae subsp.equisimilis and Enterococcus faecalis. 
In addition, Cubist is working on several preclinical programsto treat various serious bacterial infections as well as agents that treatacute pain. Notably, the company has two programs at or near Phase III trialsin its pipeline: One that focuses on the development of a novel cephalosporinto address certain serious infections caused by multidrug resistant,Gram-negative organisms; and a second program for the treatment of C. difficile-associated diarrhea.
"Cubist's strategic intent is to become a global leader inthe discovery, development and commercialization of therapies that affectpeople with acute-care illnesses, for whom prescription decisions are madewithin the walls of a hospital or hospital-allied building," says Gilman. "Ournational hospital sales force is focused on getting to the right patients atthe right time, and providing a good therapeutic benefit. That has been ahallmark of Cubist for the past seven years, but in the last three to fouryears, we have started to take a serious look at the next wave of products inthe acute-care space and adding them to both our existing sales force and ourclinical development efforts."
Adolor's ADL5945 adds to Cubist's late-stage pipeline,giving it three strong candidates addressing significant markets. The compoundis a small-molecule, potent, peripherally acting mu opioid receptor antagonist intended to block the adverse effectsof opioid analgesics on the gastrointestinal tract without affecting analgesia.
Adolor also has a product approved in the United Statescalled ENTEREG (alvimopan), which is indicated to accelerate the time to upperand lower gastrointestinal recovery following partial large- or small-bowelresection surgery with primary anastomosis. The company also has severalearlier-stage compounds under development for the management of pain andcentral nervous system disorders.
Cubist employs about 650 people, approximately 370 of whowork in Massachusetts. Adolor's 100 employees will be folded into the company,with sales representatives remaining where they are, but the organizationalstaff moving to Lexington.
Adolor did not respond to requests for comment. In astatement announcing the deal, Michael Dougherty, the company's president andCEO, stated, "This transaction delivers significant immediate value to Adolorstockholders, as well as potential future value through the CPRs. Cubist sharesour commitment to patients and their health care providers, and we expect thatENTEREG and ADL5945 will benefit from Cubist's proven track record and largerplatform in development and commercialization."

Amy Swinderman

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