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Oculex Acquired by Allergan Allergan, Inc (NYSE: AGN) announced today taht is has entered into a definitive merger agreement to acquire Oculex Pharmaceuticals, Inc., subject to certain conditions, including Federal Trade Commision and Oculex shareholder approval. Officers, directors, affilicated investment funds and certain other significant shareholdersof Oculex have eecuted shareholder support agreements, agreeing to vote in favor of the acquisition approved by the Boards of Directors of both Allergan and Oculex. Allergan will pay approximately $230 million for the Oculex business in an all cash transcation. It is estimated that as much as 75 percent to 90 percent of the purchase price will be expensed by Allergan as in-process research and development in the fourth quarter of 2003, with the balance being allocated to other tangible net assets, core technology and goodwill. An independent valuation is being performed by a major accounting firm to determine the final allocation of the purchase price. Allergan expects the acquisition to be completed by the end of November 2003. Oculex’s lead investigational product, Posurdex®, is a proprietary, biodegradable, sustained release implant that delivers dexamethasone to the targeted disease site at the back of the eye. Phase 2 clinical trials for Posurdex® presented earlier this year showed promising results. Allergan intends to initiate Phase 3 clinical trials for Posurdex®, for the treatment of macular edema, in early 2004. The Phase 3 clinical trials will focus on macular edema associated with diabetes and other conditions. If these Phase 3 clinical trials are successful, Allergan anticipates a possible FDA approval for Posurdex® in the late 2006 or 2007 timeframe. Macular edema is a sight-threatening condition that results from the swelling of the central retina, or macula, and is associated with diseases such as diabetic retinopathy, retinal vein occlusion and uveitis. Affecting more than 750,000 people in the United States alone, and over 2.5 million worldwide, macular edema is the leading cause of visual disabilities and blindness among individuals with diabetes. A significant share of these patients have persistent macular edema that has failed to respond to the current standard of care. Allergan currently believes the annual market potential for this indication could be over $500 million. “This is a very exciting opportunity for Allergan,” said Dr. Lester J. Kaplan, Allergan’s Corporate Vice President and President, Research and Development and Global BOTOX®. “This acquisition is consistent with Allergan’s goal to find innovative treatments for the currently unmet medical needs in the posterior segment of the eye. This transaction provides us with access to a late stage retinal disease development program with strong Phase 2 data. Additionally, Oculex’s biodegradable drug delivery technology will provide Allergan with a versatile platform for sustained local delivery of compounds to the eye, whether on our own or in collaboration with others.” Other than the write-off of in-process research and development costs discussed above, Allergan does not anticipate that the Oculex acquisition will have an impact on its previously stated 2003 adjusted earnings per share guidance of $2.31. In 2004, Allergan expects to invest between $25 million and $30 million in research and development associated with the Oculex technology. Allergan believes that it will be in a position to absorb a significant portion of the ongoing research and development costs related to this strategically important transaction. However, as a consequence of the depth and breadth of Allergan’s existing technology portfolio, and the importance of allocating appropriate resources to the newly acquired Oculex technology, Allergan does not believe it to be prudent to fully absorb the incremental research and development costs associated with the Oculex technology and sacrifice other highly viable technology programs. Although Allergan has not yet completed its 2004 budget process, the Company believes that the range of dilution associated with these additional research and development costs will be between 3 percent and 4 percent on the current 2004 First Call earnings per share consensus of $2.83. During Allergan’s 2004 budget process, which is not yet complete, prioritization decisions will be made regarding research and development projects. 2004 earnings per share guidance will be provided in connection with Allergan’s January 2004 earnings release and conference call. SOURCE Allergan, Inc.
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