>> Mon Nov 6, 2006 11:52am ET By Ransdell Pierson and Lewis Krauskopf
NEW YORK, Nov 6 (Reuters) - Abbott Laboratories Inc. (ABT) said on Monday it will acquire Kos Pharmaceuticals Inc. (KOSP) in a $3.7 billion deal that would make it the leader in the hot field of drugs to boost "good" HDL cholesterol.
…Kos' main products -- Niaspan and Advicor -- incorporate prescription forms of the nutrient niacin, which boosts HDL. Sales of the products have surged, pushing up Kos' share price, amid increasing evidence that low levels of heart-protective HDL may be a bigger cause of heart disease than high levels of artery-clogging "bad" LDL cholesterol.
Other types of Kos products in development would be icing on the cake for Abbott, including an asthma drug in late-stage trials and a form of inhaled insulin now in mid-stage studies.
"Inhaled insulin would be important because of our growing diabetes business," Abbott spokeswoman Melissa Brotz said, referring to Abbott sales of $1.1 billion in 2005 from its line of diabetes diagnostic products -- including blood glucose strips and meters.
Abbott said it expects the deal to hurt earnings per share in 2007 by 2 cents to 3 cents, and be neutral to positive for earnings in 2008.
"Abbott shareholders over the long haul will be pleasantly pleased in what they've acquired through the Kos deal," predicted Robert Hazlett, an analyst with BMO Capital Markets.
The transaction is the latest in a flood of big acquisitions in the pharmaceuticals sector as drug companies, struggling to develop new products of their own, compete to acquire them from others, typically biotechnology companies.
And analysts have been surprised at the premiums being paid -- some think Abbott may be paying too much too.
"I'm a little surprised at the premium," said Bruce Cranna, an analyst at Leerink Swann & Co. "This is a space Abbott has expressed interest in, but I'm not quite sure that they have enough critical mass in the primary-care physician marketplace versus the specialist market."
BMO's Hazlett said Niaspan and Advicor should bring Kos combined sales of $650 million this year, but he predicted annual sales of the two drugs and improved versions of them could eventually top $2 billion when bolstered by Abbott's larger sales force and marketing budget.
The deal underscores Abbott's determination to become a major player in the cardiovascular market. It already sells the $1 billion-a-year Tricor, which cuts levels of blood fats called triglycerides, and is developing a pill that combines Tricor with AstraZeneca's (AZN) Crestor -- one of the most potent drugs against LDL cholesterol[#msg-11890439].
Moreover, Abbott recently launched in Europe its drug-coated Xience stent, which has proven to be more effective in clinical tests than Boston Scientific's (BSX) market-leading Taxus device to prop open coronary arteries. [This is the stent ABT acquired from Guidant as a condition for BSX’s acquisition of the whole company.]
Kos, meanwhile, is conducting late-stage trials of a new product called Simcor that combines Niaspan and a generic version of Merck & Co.'s (MRK) LDL-lowering Zocor.
Kos has been bracing for a marketing battle with Merck, which is developing its own niacin-based products to boost HDL. Merck suffered a setback in September when it announced it would delay seeking approval for a triple-combination product that combines niacin, Zocor and a third ingredient designed to block the facial flushing that is often a side effect of niacin.
Pfizer Inc. (PFE) is betting heavily on HDL as well, spending $800 million on ongoing late-stage trials of a drug called torcetrapib that could reach drugstores by 2011, if U.S. regulators approve it despite its tendency to raise blood pressure in clinical trials.
Shares of Kos jumped $26.90, or 54 percent, to a 52-week high of $76.99 in heavy morning trade on the Nasdaq. Abbott shares slipped 16 cents to $47.48 on the New York Stock Exchange.
Shareholders owning a majority of the shares of Kos' common stock have agreed to tender their shares or have their shares acquired by Abbott, the companies said. <<
Any implication for the rest of the "potential takeover targets" out there, and what pipelines would you consider most worthy of some big pharma buying out these days?
KOSP's pipeline was ignored in today's news, seems to me...
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