Strategy

Allergan Bets on Tobira’s Liver Disease Drug

The Botox maker will pay up to $1.7 billion for Tobira, the developer of an experimental treatment for a nonalcoholic fatty liver condition.
Matthew HellerSeptember 20, 2016

Allergan said Tuesday it had agreed to acquire Tobira Therapeutics for up to $1.7 billion, joining other big drugmakers in the high-stakes race to develop treatments for a liver disease associated with obesity and diabetes.

The disease, nonalcoholic steatohepatitis (NASH) affects 5% of the U.S. population, or more than 15 million Americans. No treatments have been approved but Tobira has been developing an experimental drug called cenicriviroc (CVC).

Allergan has offered $28.35 per share upfront for the company, a 500% premium to the stock’s close on Monday, and could end up paying as much as $49.84 per share, contingent on Tobira achieving certain milestones. The stock soared more than 700% to $38.91 in trading Tuesday.

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“With the increasing rates of diabetes, obesity and other metabolic conditions in the U.S. and in developed nations globally, NASH is set to become one of the next epidemic-level chronic diseases we face as a society,” Allergan CEO Brent Saunders said in a news release.

“With this acquisition, Allergan will now have one of the strongest portfolios of development stage programs for the treatment of NASH, with cenicriviroc as the cornerstone,” he added.

Other drugmakers developing NASH treatments include Intercept Pharmaceuticals, Gilead Sciences, and the French company Genfit. According to FierceBiotech, a successful NASH medication could generate up to $4 billion in annual sales.

“Allergan is making an excellent move into the NASH space, which is underappreciated by Wall Street and one of the major categories of untreated diseases,” Len Yaffe, portfolio manager of StocDoc Partners who holds Tobira shares, told Reuters.

NASH is the most extreme form of nonalcoholic fatty liver disease and can progress to cirrhosis, liver cancer and eventual liver failure. Tobira disclosed in July that cenicriviroc failed to achieve its main goal in a mid-stage trial but did meet one of two secondary endpoints in treating liver scarring associated with NASH.

A late-stage study is expected to begin next year. “CVC has been shown in clinical trials to provide significant improvement in liver fibrosis, the hallmark of NASH,” said David Nicholson, Allergan’s chief R&D officer.