After a summer spent beating off bids by its founder to change the direction of the firm, Biovail Corp has shown its desire to be a major player in the central nervous system area by acquiring Prestwick Pharmaceuticals.
The Canadian firm has paid $100 million to get hold of privately-held Prestwick, which holds the Canadian and US licensing rights to Xenazine (tetrabenazine) for the treatment of chorea, the most common symptom of Huntington’s Disease. The drug, a selective and reversible centrally-acting dopamine depleting treatment, recently became the first therapy to be approved in the USA for any HD symptom. Xenazine was granted orphan drug status, which gives it seven years of market exclusivity.
Prestwick had just signed a supply and marketing agreement with Ovation Pharmaceuticals for Xenazine and the latter firm will start seling the drug through its 48-person field force by the end of the year, with Biovail supplying the product. For net sales up to $125 million, the Toronto-headquartered firm’s supply price will be 72% of those sales and beyond $125 million, it will be 65%.
Biovail added that at both tiers it will pay a supply price of 50% of sales to the privately-owned Anglo-Irish pharmaceutical group Cambridge Laboratories, the worldwide licence holder of tetrabenazine. The deal also gives Biovail access to early-stage products such as lisuride for the treatment of Parkinson’s disease and D-serine for schizophrenia.
Biovail chief executive Bill Wells said the transaction is “another important step in the implementation of our new strategic focus”. The deal “meets all of our acquisition criteria, and represents Biovail’s first commercial exposure to specialty markets in central nervous system disorders”, he added. The acquisition is expected to be accretive to both earnings per share and cash flows in 2009.
The move comes after Biovail announced earlier in the year that it was moving away from developing controlled-release drugs to focusing on CNS treatments, a market which is worth $70 billion a year globally. That decision was described by Biovail founder and former chief executive Eugene Melnyk as “absolute pharmaceutical suicide” and he attempted to replace the company’s board with his own slate of directors.
However, after a bitter battle for control of the firm, with both sides hurling abuse at each other, shareholders voted in favour of the existing board.
