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Otsuka Pharma to Acquire Astex Pharma, Shares Up

Zacks Equity Research

Astex Pharmaceuticals (ASTX) recently announced that Japanese based Otsuka Pharmaceutical Co., Ltd. will acquire the former for approximately $8.50 per share.

The transaction has been approved by the board of both the companies. The purchase price of $8.50 per share represents a premium of 48% to Astex Pharma’s average closing stock price in the last 30 days.  The total consideration comes to $886 million.

The acquisition is expected to close by year-end. Shares of Astex Pharma reacted positively to the news. We are positive on the acquisition. We believe the acquisition of Astex Pharma will boost Otsuka Pharma’s pipeline for neuroscience, cardiovascular and oncology. It will also provide Otsuka Pharma access to Astex Pharma’s proprietary drug discovery platform, Pyramid.

Astex Pharma primarily focuses on the development of molecule therapeutics in the field of oncology. The company currently has just one marketed product, Dacogen (injection), indicated for the treatment of patients suffering from myelodysplastic syndrome (:MDS). Dacogen was approved by the U.S. Food and Drug Administration in 2006.

Dacogen has been licensed to Eisai Co., Ltd. (ESALY). We note that Astex Pharma receives development and license revenue from partnered programs and royalty revenues relating to the sales of Dacogen.

Dacogen was approved in Europe in 2012 for the treatment of acute myeloid leukemia (:AML) in patients above 65 years of age.

Key pipeline candidates at Astex Pharma include SGI-110, which is being evaluated for a variety of hematological and solid tumor oncology indications, including MDS, AML, ovarian cancer and liver cancer and AT13387, which is being evaluated for the treatment of prostate and lung cancers.

We note that shares of Astex Pharma jumped last week after the company reported positive top line results from the ongoing phase II study on its candidate, SGI-110 for AML and MDS indication.

Astex Pharma currently carries a Zacks Rank #3 (Hold). Right now, Jazz Pharmaceuticals (JAZZ) and Ironwood Pharmaceuticals (IRWD) looks attractive with a Zacks Rank #2 (Buy).

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Read the Full Research Report on ESALY

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