Dainippon Sumitomo Pharma is to acquire Sepracor in a $2.6 billion deal which will give Japan’s seventh largest drugmaker a foothold in the USA.
Under the terms of the deal, DSP will pay $23.00 per share, which represents a 48.0% premium on Sepracor’s average stock price over the last six months and 27.6% more than the Massachusetts-based group’s closing price on September 1. The transaction has been unanimously approved by the boards of both companies.
In return, DSP will get hold of Sepracor’s insomnia drug Lunesta (eszopiclone), the asthma for the treatment of insomnia in adults, Xopenex (levalbuterol), which is indicated for the treatment of chronic obstructive pulmonary disease and asthma, and another COPD drug Brovana (arformoterol). Sepracor’s portfolio also includes ciclesonide licensed in from Nycomed and sold as Omnaris for allergic rhinitis, and Alvesco for asthma and it has “promising near-term product candidates” such as Stedesa (eslicarbazepine) for the treatment of epilepsy.
Perhaps most attractive of all is Sepracor’s 1,200-strong sales force in the USA, which will prove useful in the promotion of DSP’s experimental schizophrenia drug lurasidone, which has impressed in Phase III trials. Masayo Tada, president of the Osaka-based company, said that Sepracor will become a “centre of excellence’ for the firm in the USA and provide “a strategically important base for business development”.
Adrian Adams, Sepracor’s chief executive, said the transaction should enable Sepracor to enhance its product pipeline “and enjoy sustainable growth well into the future”. He added that “this very exciting business combination” is “not only in the best interest of our shareholders, but also potentially delivers exciting opportunities to our talented employees now and in the future”.
News of the deal went down well with both sets of shareholders but analysts were more cautious. Aaron Gal at Sanford Bernstein issued a note saying that “arguably DSP is buying a US sales force it can leverage to promote its current and pipeline products”. However, “we are unconvinced that this is the most sensible option for the company given the alternatives of building a sales team internally or acquiring a higher performing sales team at a more rational price”.
Sepracor’s second-quarter revenues reached $326.2 million, up 11%, while DSP’s turnover for the year ended March 31 was 264 billion yen, about $2.86 billion.
