Monday, January 28, 2013

Allergan buys MAP Pharmaceuticals

Recently Allergan announced the acquisition of its migraine-focused commercial partner MAP Pharmaceuticals (Nasdaq:MAPP) for $25/share ($958mn) in cash, representing a 60% premium over MAP’s Jan-22 closing price ($15.58).    This is a third major deal in the NDDS space in the recent past.
(Reddy buys Octoplus, Pfizer buys Nextwave )

Transaction Rationale

The transaction will give Allergan access to MAP's lead compound Levadex, which is  an orally inhaled version of dihydroergotamine mesylate (DHE) under FDA review (PDUFA April 15) for acute treatment of migraine in adults. Allergan's has a major presence in the migraine space with its key product Botox. Levadex is also meant for migraine but would complement Botox which is meant for treating  chronic migraine.


Clinical Data on Levadex

In a Phase 3 trial, Levadex demonstrated improvement in all co-primary endpoints which included proportion of patients who are
1)  pain-free, 2) photophobia-free 3) phonophobia-free 4) and nausea-free at two hours.
Levadex also demonstrated improved safety as only 5% of patients experiencing nausea and 2%
vomiting.

Transaction Valuation -Levadex (DHE) Sales Potential -

Over 30mn people in the US suffer migraine headaches, and not all patients respond to triptans or NSAIDS, the standard of care. DHE is widely used to treat patients who are refractory to Triptans and other options. About 30 to 60% patients do not respond to conventional therapy.
Although DHE  has been used to effectively treat refractory migraine for several decades, but dosing is inconvenient as the drug is typically administered intravenously in hospitals. Levadex addresses
this problem of inconvenient administration with inhaled delivery, allowing patients to self-administer at home. Levadex has previously received a complete response letter from the USFDA on account of CMC issues, while efficacy and safety was not questioned.
We forecast $300m in peak sales for Levadex, while Allergan is best positioned to accomplish this with existing presence through Botox.