GI dealmaking pays off for Valeant, Actavis with same-day FDA nods in IBS

Valeant CEO J. Michael Pearson

When it comes to go-aheads in irritable bowel syndrome, the FDA was busy Wednesday, approving the indication for a pair of drugs. And now, it looks as if recent M&A moves to acquire those drugs are about to pay off for Valeant ($VRX) and Actavis ($ACT).

To combat the malady, IBS with diarrhea, the agency green-lighted Xifaxan--which Valeant nabbed earlier this year with its $11 billion Salix buy--and Actavis' Viberzi, acquired as a candidate drug when pickup Forest Labs sealed its $1.1 billion deal for Furiex last July. Both could see some serious sales upswing with the decision.

In the case of Xifaxan, Salix has predicted the IBS-D label expansion could pad sales by $1.6 billion a year by 2024, bringing the blockbuster med's haul to $3 billion a year. It's a big enough needle-mover that some analysts had predicted that Salix suitors would wait to see the FDA's decision before buying the company. But Valeant, quick to the draw when it comes to M&A, didn't dawdle, and now it'll see its move pay off.

And while industry-watchers aren't expecting the same kind of numbers for Actavis' Viberzi--Leerink Partners' Jason Gerberry forecast about $400 million by 2020 in a Wednesday note to clients--the "favorable label" that won the FDA's blessing "suggests potential room for upside," he figures. Notably absent: a boxed warning for pancreatitis, which showed up in Phase II and III studies.

But unlike Xifaxan, which Valeant has said would be ready to roll as soon as it got its regulatory OK, Viberzi might have to wait awhile before making its appearance. It's an opioid receptor agonist, meaning it's potentially addictive--and thus subject to Drug Enforcement Agency (DEA) scheduling. That could mean a rollout delay until as late as next year's Q1, ISI Evercore analyst Umer Raffat wrote in a Thursday note to clients.

The good news for Actavis: Any launch lag time behind Xifaxan shouldn't damage Viberzi's market share too much, Gerberry said, as he thinks they'll compete in different segments. Specialists are likely to use it only for patients who don't respond to the Valeant drug or who have failed several OTC antidiarrheals, thanks to Xifaxan's shorter therapy duration and superior safety profile, he wrote. 

- read Valeant's release
- read Actavis' release

Special Report: Pharma's top M&A deals of 2014 - Actavis/Forest Laboratories

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