Abbott and Kos Pharmaceuticals, Inc. today announced a definitive agreement for Abbott to acquire Kos for $78 per share in cash, for a total transaction value of $3.7 billion, net of cash currently held by Kos. Based in Cranbury, N.J., Kos is a specialty pharmaceutical company that develops and markets proprietary medications for the treatment of chronic cardiovascular, metabolic and respiratory diseases. The company has a growing presence in the $20 billion lipid management market.
“Kos Pharmaceuticals is an excellent strategic fit for Abbott, both scientifically and commercially,” said Miles D. White, chairman and chief executive officer, Abbott. “This acquisition expands Abbott’s presence in the lipid management market and will provide several on-market and late-stage pipeline products. Kos also complements our existing commercial and research and development expertise, and increases our R&D spending capacity.”
“Since being founded in 1988 by our current Chairman Emeritus Michael Jaharis and Chairman Daniel Bell, Kos has pioneered the HDL therapy area in the United States and firmly established Niaspan and Advicor as successful and highly differentiated therapies,” said Adrian Adams, president and chief executive officer, Kos Pharmaceuticals. “This is an opportune time to become a part of another fast-growing organization like Abbott with the shared experience and additional resources to help capture the full value of our highly differentiated cholesterol franchise and our growing R&D pipeline.”
Lipid Management Portfolio
The lipid management market is the single largest pharmaceutical segment and continues to grow at double-digit rates. Kos Pharmaceuticals’ two lead products are Niaspan? (niacin extended-release tablets), an extended-release niacin product that raises HDL, or good cholesterol levels; and Advicor? (niacin extended-release/ lovastatin tablets), a Niaspan/lovastatin combination product that treats patients with multiple lipid disorders.
A new Niaspan Caplet Formulation with a range of dosages is currently under U.S. Food and Drug Administration review. Kos is also in late-stage development with Simcor?, a fixed-dose combination of Niaspan and simvastatin (generic Zocor?) to treat lipid disorders, which is expected to be submitted for regulatory review in the United States in the first half of 2007. These on-market cholesterol products and development opportunities will join Abbott’s lipid management portfolio, which includes on-market TriCor? (fenofibrate tablets); a next-generation fenofibrate, ABT-335; and a TriCor/Crestor? development program with AstraZeneca announced in July 2006.
Other Pipeline Products
Kos Pharmaceuticals is also developing a number of other products, including an asthma medication and an inhaled insulin. Flutiform?, in-licensed from SkyePharma, is currently in late-stage development for adult and adolescent asthma and will provide an expanded presence for Abbott in the $10 billion asthma market, in addition to Kos’ currently marketed asthma product. Kos is also developing an inhaled insulin product, which will complement Abbott’s significant presence in the diabetes market ? with its leading glucose monitoring and diabetes nutritionals businesses.
Financial Terms
Under the terms of the agreement, Abbott will make a tender offer for all of the outstanding stock of Kos Pharmaceuticals for $78 per share or $3.7 billion, net of cash currently held by Kos. Abbott expects the transaction to be $0.02 to $0.03 dilutive to ongoing earnings per share in 2007, neutral to accretive in 2008 and building to significant accretion thereafter. Following the closing, the transaction is expected to result in one-time charges, primarily for in-process research and development and integration expenses.
The transaction is structured as a tender offer for all outstanding shares of Kos Pharmaceuticals followed by a merger. The transaction is subject to customary closing conditions, including antitrust clearance under the Hart-Scott Rodino Act and acquisition of a majority of the outstanding Kos Pharmaceuticals shares in the tender offer. Shareholders owning a majority of the shares of Kos Pharmaceuticals’ common stock have entered into agreements under which they agreed to tender their shares or have their shares acquired by Abbott.
TriCor Indication and Safety Information
TriCor (fenofibrate tablets) is a lipid-lowering agent used to treat abnormal lipid levels in the bloodstream, including cholesterol and triglycerides. TriCor is a once-daily treatment available in 145 mg and 48 mg tablets that can be taken with or without food.
TriCor, in addition to appropriate diet, is used to treat adults with high cholesterol, with or without elevated triglycerides (Fredrickson types IIa, IIb). TriCor reduces elevated LDL-C (“bad” cholesterol), total cholesterol, triglycerides and apolipoprotein B, and increases HDL-C (“good” cholesterol). The effect of TriCor on cardiovascular morbidity and mortality and noncardiovascular mortality has not been established. Abbott markets TriCor in the U.S. through an agreement with Solvay Pharmaceuticals. ABT-335 development is co-funded by Solvay Pharmaceuticals.
TriCor, in addition to appropriate diet, is also used to treat adults with high triglycerides (Fredrickson types IV and V). Excessive body weight, drinking alcohol, diseases such as diabetes and hypothyroidism, and various drugs can contribute to high triglyceride levels, and these should be assessed before a patient is prescribed TriCor tablets. TriCor should only be prescribed after reasonable attempts to modify lipid profile with diet modification, exercise and decreased alcohol consumption have failed. It is important for patients to stay on a diet restricted in saturated fat and cholesterol while taking TriCor.
TriCor tablets are not for everyone. TriCor should not be taken by people with serious liver, kidney or gallbladder disease, or by those who may be allergic or sensitive to the drug.
The combined use of TriCor and HMG-CoA reductase inhibitors (statins) has not been advised because of a potential for serious side effects that could lead to acute renal failure. The benefit of further alterations in lipid levels needs to be weighed against the increased risks of this drug combination.
TriCor tablets may cause changes in laboratory reports, especially in liver chemistry results. Regular periodic liver tests should be performed while patients are taking TriCor. Patients should contact their doctors if they feel pain in the stomach area while taking TriCor, as this can be a sign of gallstones or inflammation of the pancreas. TriCor may cause muscle pain or serious muscle disease, allergic-type reactions and possible changes in blood chemistry. If patients experience unexpected muscle pain, tenderness or weakness while taking TriCor, a health-care provider should be contacted immediately.
Patients should notify their doctor if they are taking any other drugs while taking TriCor including any other cholesterol-lowering medications. TriCor may have an effect on drugs that help prevent blood clotting, such as the blood thinner Coumadin? (warfarin sodium tablets, USP), and doctors should monitor blood-clotting tests more frequently.
Patients should tell their doctors about any side effects they experience, including breathing problems, back pain and headaches.
For more information about TriCor (fenofibrate) tablets, including full prescribing information, please visit www.tricortablets.com.
Niaspan Indication and Safety Information
Niaspan is the only FDA-approved, once-daily extended-release prescription formulation of niacin for treating abnormal cholesterol levels. Niaspan is indicated as an adjunct to diet when the response to a diet restricted in saturated fat and cholesterol and other nonpharmacologic measures alone has been inadequate, to reduce elevated total cholesterol, LDL-C, ApoB, and triglyceride levels, and to increase HDL-C in patients with primary hypercholesterolemia and mixed dyslipidemia. In patients with a history of myocardial infarction and hypercholesterolemia, niacin is indicated to reduce the risk of recurrent non-fatal myocardial infarction or coronary artery disease and hypercholesterolemia. Niacin, in combination with a bile acid binding resin, is indicated to slow progression or promote regression of atherosclerotic disease.
Niaspan is contraindicated in patients with allergies to any of its ingredients, active peptic ulcer disease, significant or unexplained persistent liver dysfunction, or arterial bleeding. Niaspan should not be substituted for equivalent doses of immediate-release niacin. Niaspan should be prescribed with caution in patients who consume substantial amounts of alcohol and/or have a past history of liver disease. Liver function tests should be performed on all patients during therapy with Niaspan. Use of Niaspan with other lipid-altering medications called statins may increase the risk of rhabdomyolysis, a rare condition that causes muscles to breakdown. The most common side effect with Niaspan is flushing of the skin. Other commonly reported side effects include indigestion, headache, pain, abdominal pain, nausea, itching, diarrhea, running nose, vomiting and rash. Patients with diabetes should carefully monitor their blood sugar and report changes to their doctor.
About Kos Pharmaceuticals, Inc.
Kos Pharmaceuticals, Inc. is a fully integrated specialty pharmaceutical company engaged in developing, commercializing, manufacturing and marketing proprietary prescription products for the treatment of chronic diseases with a particular focus on the cardiovascular, metabolic and respiratory disease areas. The company’s principal product development strategy is to reformulate existing pharmaceutical products with large market potential to improve safety, efficacy, and patient compliance. Kos’ strategy also includes making measured investments in new chemical entity research through in-house and sponsored research, scientific in-licensing and general corporate development activities. The company currently markets Niaspan, Advicor, Azmacort, Cardizem LA, Teveten and Teveten HCT. Kos has a strong and growing research and development pipeline including proprietary drug delivery technologies in solid-dose, inhalation and aerosol metered-dose device administration to help fuel sustained, organic sales growth into the future.
About Abbott
Abbott is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs 65,000 people and markets its products in more than 130 countries.