Recently, Hospira (HSP) announced its intention to acquire Javelin Pharmaceuticals (JAV) for $2.20 per share or approximately $145 million. Hospira expects to initiate the tender offer for all the outstanding shares of Javelin shortly.
The acquisition of Javelin will provide Hospira with access to Javelin’s lead product candidate, Dyloject, a post-operative pain management drug. The drug is awaiting approval from the US Food and Drug Administration (FDA). A final decision is likely by October 3, 2010.
As a non-opioid analgesic, Dyloject scores over traditional intravenous opioids, which are associated with significant adverse events in pain management. Hospira will gain global rights to Dyloject other than in Europe, where rights are licensed to a third party.
Hospira plans to market the product in the US, Canada, Latin America and the Asia-Pacific region, where it also markets Precedex, Hospira’s proprietary sedation agent. Since both Precedex and Dyloject are marketed to anesthesiologists, Hospira will be able to leverage its Precedex sales force to promote Dyloject.
In December 2009, Myriad Pharmaceuticals (MYRX) had decided to acquire Javelin in a stock swap deal. However, Javelin decided to terminate this agreement in April 2010. The termination will result in Javelin paying $4.4 million to Myriad in the form of a termination fee and other expenses incurred by Myriad related to the merger.
To meet these expenses and repay its outstanding debt burden, Javelin has entered into a loan agreement with Hospira under which the former may borrow funds up to $4.5 million prior to closing of the merger.
We believe Dyloject, on successful commercialization, will be a good addition to Hospira’s product portfolio and will help boost revenues. We are currently Neutral on Hospira.

Read the full analyst report on “HSP”
Read the full analyst report on “JAV”
Read the full analyst report on “MYRX”
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