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Allergan Inks Deal to Buy Texas-Based Repros Therapeutics

Zacks Equity Research

Irish pharma giant Allergan plc AGN has recently inked a definitive agreement to acquire a Texas-based development stage biopharmaceutical company, Repros Therapeutics RPRX. Repros is focused on developing new drugs to treat hormonal and reproductive system disorders.

Shares of Allergan have declined 18.2% this year so far, comparing favorably with the industry’s decrease of 28.1%. Although Repros’ shares plunged 49.7% so far this year, the same jumped more than 40% following the news on Dec 12.

 

Pursuant to the agreement, Allergan will execute the acquisition through its subsidiary for a cash tender offer of $0.67 per share of Repros’ common stock. The closing of the transaction is subject to customary closing conditions. Repros anticipates completion of the buyout during the first quarter of 2018.

Notably, the agreement will add two late stage candidates, Proellex and enclomiphene, to Allergan’s pipeline. Repros plans to initiate a phase III study on Proellex for treatment of uterine fibroid. On one hand, the company currently evaluates Proellex, a selective progesterone modulator (SPRM), in a phase IIb study for uterine fibroids by vaginal delivery. On the other, enclomiphene is under evaluation for treating low testosterone levels in overweight men. Notably, the company had submitted regulatory applications to the European Medicines Agency (EMA) in September 2016, subsequently accepted by the regulatory body.

On a positive note, addition of these candidates would boost Allergan’s pipeline and that bodes well for the company’s long-term growth.

We remind investors that acquisitions form an integral part of Allergan’s expansion strategy as the company completed four major takeovers (Arrow, Specifar, Actavis Group and Warner Chilcott) apart from the Forest and Allergan Inc. deals in the past few years. This year so far, Allergan has burgeoned its medical aesthetics business into regenerative medicine and body sculpting through the accretive acquisitions of LifeCell and ZELTIQ, respectively.

These buyouts not only provided Allergan with operational expertise but also aided the company to enhance its commercial presence and fortified its foothold in the key markets.

Allergan PLC. Price

Allergan PLC. Price | Allergan PLC. Quote

Zacks Rank & Key Picks

Allergan carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the health care sector are Corcept Therapeutics Inc. CORT and Achillion Pharmaceuticals, Inc. ACHN, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Corcept’s earnings per share estimates have moved up from 77 cents to 88 cents for 2018 over the last 60 days. The company delivered positive earnings surprises in two of the trailing four quarters with an average beat of 14.32%. Share price of the company has skyrocketed 136.4% year to date.

Estimates for Achillion’s loss per share have narrowed from 66 cents to 63 cents for 2017 and from 75 cents to 67 cents for 2018 over the last 60 days. The company surpassed expectations in two of the last four quarters with an average positive surprise of 4.51%.

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