What Endo thought was a real deal has turned into a kill deal.
The Dublin-based Endo and its Par sterile injectables subsidiaries Wednesday said a $190 million agreement to buy sterile injectables company Somerset Therapeutics had been terminated without penalties because it was taking too long to complete.
Endo in April announced it was buying the New Jersey-based developer of sterile drugs and its Indian CMO and manufacturing operation Wintac to boost its standing in the fast-growing sterile injectables manufacturing market. The termination announcement came the day before Endo reported earnings with strong growth in sales of sterile injectables but a net loss on continuing operations.
“Endo has worked diligently to consummate this transaction since executing definitive agreements in April 2018; however, certain regulatory approvals in India have taken longer than anticipated and we do not have clarity as to when those approvals may be received," Endo CEO Paul Campanelli said in a statement. "We therefore exercised our right to terminate the acquisition agreements today and we remain focused on continuing to enhance the value of our businesses."
The deal would have given Endo an FDA sterile manufacturing plant Wintac operates in Bangalore. It also would have picked up eight approved drugs and a pipeline of more than 40 products, of which more than 25 were awaiting FDA consideration.
Endo got into the sterile injectables business with its $8 billion splurge on Par Pharmaceutical in 2015. It has had some tough years since. Under pressure from the FDA, Endo in 2017 pulled from the market its opioid painkiller Opana ER. The FDA said in the midst of the opioid addiction crisis, the risks of Opana ER outweighed its benefits. That and a restructuring of its manufacturing operations tied to Opana led the company to take more than $5 billion in write-downs.
Endo has been leaning hard on sterile injectables in the meantime. The company today reported that sales of sterile injectables were up 32% to $259 million in the fourth quarter but it had a loss of $265 million, or $1.18 a share on continuing operations. That compared with a loss of $272 million, or $1.22 a share, in the same quarter a year ago. Adjusted diluted EPS was 75 cents compared with 77 cents diluted EPS in the same quarter a year ago.