Valeant Pharmaceuticals International (VRX) recently announced the acquisition of the Canadian rights to Cholestagel (colesevelam) from Genzyme Corp. (GENZ) for an upfront payment of $2 million. Valeant is required to make additional milestone payments of up to $7 million.
Cholestagel, which is currently pending approval in Canada, is indicated for use as an adjunct to diet and exercise to reduce elevated low-density lipoprotein cholesterol in patients with primary hyperlipidemia. The drug can be used either as a monotherapy or in combination with a statin.
Genzyme, having developed Cholestagel, markets the same outside the US, while Daiichi Sankyo sells the drug in the US under the brand name WelChol.
We note that Valeant has been actively pursuing deals and acquisitions to grow revenues in order to compensate for the loss of revenues resulting from the genericization of neurology product Diastat and HIV drug ribavirin.
In addition to acquiring the Canadian company Biovail Corp. in 2010, Valeant recently entered into an agreement to acquire all the US and Canadian rights to GlaxoSmithKline plc’s (GSK) herpes treatment, Zovirax, for $300 million. The transaction is subject to customary closing conditions.
Valeant is also into an agreement for the acquisition of Switzerland based PharmaSwiss S.A. for €350 million. The company needs to pay up to €30 million to a few of PharmaSwiss’ shareholders upon achievement of certain milestones.
The PharmaSwiss transaction, which is expected to be immediately accretive, is scheduled to close in the first or second quarter of 2011, subject to customary closing conditions.
We currently have a Neutral recommendation on Valeant.
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