Otsuka Acquires Avanir For Neurologic Disease Pipeline

Otsuka Pharmaceutical has agreed to acquire Avanir Pharmaceuticals. The companies announced the deal in a press release, stating that Otsuka will pay approximately $3.5 billion for Avanir shares in cash. The Board of Directors of Avanir and Otsuka have approved the sale, which is expected to close in the first quarter of 2015. Taro Iwamoto, president and director of Otsuka, said, "As we bring together Otsuka's experience and business track record in the area of mental illnesses with Avanir's strengths in neurologic diseases, we believe that we can evolve into a truly global CNS pharmaceutical company.”

Otsuka and Avanir Agreement

Otsuka has agreed to launch a tender offer within ten days for all outstanding shares of Avanir. When the deal closes, Avanir will continue its operations as an independent company and a subsidiary of Otsuka America. Avanir’s activities will include development and commercialization of drugs targeting CNS-related disorders in the U.S. Keith A. Katkin, president and CEO of Avanir Pharmaceuticals, also commented on the deal, stating that together, the two companies could move more rapidly.

Avanir Products

Osaka’s Mr. Iwamoto said that Avanir’s strength in neurological disease treatments was the main driver of the acquisition. In its press release, Otsuka stated Avanir’s strategic value, which includes Nuedexta for pseudobulbar affect (PBA) disease and Avanir’s expertise in neurology, which complements Otsuka’s capabilities in psychiatric diseases. Otsuka also believes in Avanir’s late-stage investigational compound AVP-786, which targets the agitation associated with Alzheimer’s disease and is entering Phase 3 clinical trials.

Avanir developed Nuedexta for PBA and launched it in February 2011, making it the only treatment for the rare disease. Otsuka says that sales of the agent reached $94 million in the U.S. from July 2013 through June 2014. The agent is a combination of dextromethorphan hydrobromide (20 mg) and quinidine sulfate (10 mg). Its mechanism of action is unknown, however, it works in the sigma-1 and NMDA receptors in the brain and spinal cord. In PBA, due to disease or injury, the patient experiences involuntary episodes of laughing and/or crying. The STAR pivotal clinical trial demonstrated that patients treated with Nuedexta had significantly lower laughing and crying episodes than those treated with a placebo.