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Teva to acquire Auspex for $3.5 billion

Wednesday, April 1, 2015

Teva Pharmaceutical Industries, headquartered in Israel, and Auspex Pharmaceuticals, based in California, have agreed to merge. Teva will commence a tender offer for all of the outstanding shares of Auspex at $101 per share in cash, for a total of approximately $3.2 billion in enterprise value and approximately $3.5 billion in equity value.

This transaction is expected to enhance Teva’s revenue and earnings growth profile and strengthen its core central nervous system (CNS) franchise with the addition of Auspex’s portfolio of innovative medicines for people who live with movement disorders. The transaction has been unanimously approved by the boards of directors of both Teva and Auspex, and key shareholders of Auspex have indicated their support.

Auspex is an innovative biopharmaceutical company specializing in applying deuterium chemistry to known molecules to create novel therapies with improved safety and efficacy profiles. Its lead investigational product, SD-809 (deutetrabenazine), which leverages Auspex’s deuterium technology platform is being developed for the potential treatment of chorea associated with Huntington’s disease, tardive dyskinesia and Tourette syndrome, with a pharmacokinetic profile that allows for lower doses resulting in a favorable safety profile.

In 2014, Auspex reported positive results from its phase III clinical trial for SD-809 in Huntington’s disease, with plans to submit a NDA for this indication by mid-2015. SD-809 has been granted Orphan Drug designation for the treatment of Huntington’s disease by the FDA, and Auspex expects regulatory approval and commercial launch for this indication in 2016 in the U.S. Topline results for Auspex’s phase III ARM-TD study of SD-809 as a potential treatment for tardive dyskinesia, a disorder for which there are no approved therapies, also are expected in mid-2015. Other pipeline candidates include deuterated versions of pirfenidone for idiopathic pulmonary fibrosis and levodopa for Parkinson’s disease. Auspex has an additional 60 molecules in its patent portfolio.

“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. 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,” said Erez Vigodman, president and CEO of Teva.

The acquisition of Auspex is expected to generate value and enhance Teva’s mid to long-term revenue and earnings growth profile. Teva expects the transaction to begin contributing to revenues in 2016 with the anticipated launch of SD-809 for Huntington’s disease and to be accretive to non-GAAP EPS beginning in 2017 with minimal dilution to non-GAAP EPS in the second half of 2015 and 2016. The transaction is expected to be funded with cash on hand and is not subject to any financing contingencies.

An affiliate of Teva will promptly commence a tender offer to acquire all of the outstanding shares of Auspex’s common stock for $101 per share in cash. Teva will acquire all remaining shares not tendered in the tender offer through a second-step merger at the same price as to be paid to stockholders tendering their shares in the tender offer. Teva expects the transaction will close in mid-2015.

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