NuPathe nixes Endo's buyout offer to hook up with Teva

The NuPathe love triangle resolved itself quickly. The patch-focused drugmaker decided to accept Teva Pharmaceutical Industries' ($TEVA) higher offer, sending its previous suitor, Endo Health Solutions ($ENDP), packing.

Now, Teva will pay $3.65 per share up front for NuPathe, with another $3.15 per share in additional payments if the migraine treatment Zecuity performs up to par. That offer trumped Endo's $2.85 per share in cash up front, or about $114 million compared with Endo's $105 million.

Though the NuPathe buy is relatively small in the pharma M&A world, it's a significant step for Teva--and would have been for Endo. In both cases, the companies are trying to buy up smaller companies and their products to help make up for generic competition, present and future.

Endo lost patent protection last year on two key drugs, Opana ER and Lidoderm, and inked two deals to help fight back: its $225 million buyout of generics maker Boca Pharmacal and its $1.6 billion deal for Paladin Labs. The NuPathe deal was seen as another rebuilding-by-acquisition move, similar to the growth-by-dealmaking strategy at Valeant Pharmaceuticals ($VRX), Endo CEO Rajiv De Silva's former employer.

Teva's generic problem is even bigger, with its multiple sclerosis blockbuster Copaxone set to go off patent in May, 18 months earlier than anticipated. At the J.P. Morgan Healthcare Conference last week, CFO Eyal Desheh promised a spate of M&A, and quickly. Like Endo, Teva is cutting jobs and costs to retrench; it's awaiting the advent of new CEO Erez Vigodman, who'll take over for ex-chief Jeremy Levin on Feb. 11.

"We believe that Zecuity is a great fit within our existing U.S. CNS business unit, with near-term sales and significant commercial potential," Mike Derkacz, Teva's VP and general manager of its CNS business, said in a statement. In other words, the drug will add to the company's top line immediately, when it needs the help most.

Anyone looking for a bidding war over NuPathe, however, must be disappointed. Endo bowed out soon after Teva tossed out its higher offer. In a release today, the company congratulated NuPathe on the sale price, in a backhanded sort of way: "We believe our offer represented fair value for NuPathe. We will remain disciplined in our approach to M&A," De Silva said in a statement, adding that he'll look for other opportunities to use Endo's capital "to create value for our shareholders."

- get the news from Teva
- see the release from Endo

Special Reports: Top 10 Generics Makers by 2012 Revenue - Teva | Top 10 Drug Patent Losses of 2014 - Copaxone