Struggling Endo grabs generics maker DAVA for up to $600M

Endo CEO Rajiv De Silva--FiercePharma file
Endo CEO Rajiv De Silva

Endo ($ENDP), in a world of financial hurt, has been turning to M&A lately to ease the pain. Its latest move: a deal for New Jersey generics maker DAVA Pharmaceuticals worth up to $600 million.

As Endo announced Tuesday, it will fork over $575 million in cash, with another $25 million up for grabs if sales targets are hit. And in return, it will snag commercialization and development platforms it says will immediately boost its 2014 adjusted EPS after the transaction closes in the second half of this year.

"The acquisition of DAVA is another step in our pursuit of accretive and strategic external growth opportunities where we see a clear path to meaningful upside and synergies," Endo CEO Rajiv De Silva said in a statement. "DAVA is well-positioned for continued strong and highly predictable financial performance with its existing commercial portfolio and attractive near-term pipeline, and is a natural fit for our generics business."

DAVA will bring with it a generics lineup of 13 marketed products, as well as a pipeline Endo expects will be fruitful: It anticipates more than 5 product launches in 2015, with more than 20 additional launches over the next several years.

And Endo can certainly use those. The Malvern, PA-based drugmaker has been foundering for a while now, and last year's patent expiration on top product Lidoderm hasn't helped. The company posted net losses of $436.9 million in Q1 amid a company-wide restructuring, with sales of the pain patch plummeting 82%.

This isn't the first M&A relief Endo has sought since things got rough. Since generics pounced on Lidoderm, Endo has nabbed Canada's Paladin Labs for $1.6 billion, as well as dermatological treatment device maker Solta Medical for $250 million. NuPathe, which markets migraine treatment Zecuity, nixed an Endo buyout offer to make a deal with Teva ($TEVA) in January.

And there may be more on the way, according to De Silva, the former president of merger machine Valeant ($VRX).

"With Endo's sharp focus, lean operating model and improved execution within our core businesses, strategic acquisitions will continue to play a key role in maximizing our growth potential and cash flow to drive future value for Endo shareholders," he said.

- read the release

Special Reports: The top 10 largest pharma layoffs in 2013 - Endo | The most influential people in biopharma today - J. Michael Pearson - Valeant | Top 15 drug patent losses for 2013 - Lidoderm

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