A small specialty drug company out of Texas that has been on a buying binge is picking up Somaxon Pharmaceuticals ($SOMX) and its insomnia drug Silenor for a song.
Pernix Therapeutics Holdings ($PTX) said it is offering $25 million worth of Pernix shares to Somaxon shareholders. Somaxon shares were up more than 85% on the news, to $2.74 in midmorning trading. But that is a far cry from the $27 a share the company was trading at in 2011 when the company and its drug seemed to have some promise.
Somaxon actually won FDA approval for its insomnia drug Silenor in 2010, but it had taken three tries and about $170 million to get there, a process that left it in exhausted financial shape. Efforts to find a marketing partner never panned out, and the tiny marketing force it mustered has struggled to sell much of the product in a crowded market. The San Diego-based company axed a large portion of its headquarters staff last year and set out to find a buyer. Now it has one.
Pernix, which is headquartered in a Houston suburb, was founded in 1996. It has a portfolio of over-the-counter, generic and branded drugs, including Cedax, a children's antibiotic, and Natroba, a topical treatment for head lice. It has been buying up some smaller drugmakers in recent months. In November it agreed to pay $101 million for privately owned Cypress Pharmaceutical and its subsidiary Hawthorn Pharmaceuticals, based in Madison, MS. And shortly before that it said it would pay nearly $5 million to get Houston-area contract manufacturer Great Southern Laboratories.
Pernix CEO Cooper Collins said the deal further expands the company's position in the market, while Somaxon CEO Richard W. Pasco said the buyout will let it realize the full potential of Silenor. The companies said Somaxon has sold about $11.7 million worth of Silenor in the last 12 months. Pernix is projecting $10 million to $15 million in sales of the drug annually.
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