Specialty pharmaceuticals company Pozen Inc said on Monday it would acquire Tribute Pharmaceuticals Canada Inc for about US$144 million, in a deal that would shift its domicile to Ireland and cut its tax bill.
The merged company, to be called Aralez Pharmaceuticals Plc, will focus on cardiovascular treatments and be led by Adrian Adams, who previously served as chief executive of men’s healthcare-focused company Auxilium Pharmaceuticals. Auxilium was acquired by Endo International Plc for US$2.6 billion last year.
Adams became CEO of Chapel Hill, North Carolina-based Pozen just one week ago, after founder John Plachetka retired. Pozen’s primary drug, Yosprala, is a so-called “safer form” of aspirin designed to reduce gastrointestinal side effects.
As part of the transaction, a group of investors including U.S. healthcare investment firm Deerfield Management and Canadian biotech company QLT Inc will invest up to US$350 million in growth capital for Aralez.
Adams’ history intertwines with that of QLT. As CEO of Auxilium, his efforts to acquire QLT in June 2014 were thwarted after Endo made an unsolicited offer for Auxilium.
Pozen’s deal with Tribute is the latest in a series of politically controversial “inversions”, in which a U.S. companies can lower their tax rates by shifting their domiciles abroad.
The U.S. Treasury Department announced a series of steps last September designed to make inversions more difficult and potentially less rewarding. Several high-profile deals, such as U.S. drugmaker Abbvie Inc‘s US$55 billion acquisition of Dublin-based Shire Plc, were canceled as a result.
“Clearly we are very familiar with the broader environment, but we believe the nature of the transaction at this particular point in time will withstand any speculation in the future,” Adams said in an interview.
“This is all about the structure we have in place, the platform and the opportunity,” he added.
Aralez has not yet disclosed what its new tax rate will be.
QLT, which said last year it was conducting a strategic review following the breakup of its deal with Auxilium in October, will receive a 9 percent ownership stake in Aralez for its investment. QLT shareholders will have the opportunity to take shares in Aralez or to take a portion in cash.
QLT also announced on Monday separate transactions, including an acquisition of InSite Vision Inc for $0.178 per share to create a late-stage ophthalmic-focused pharmaceutical company, and the issuance of redeemable convertible notes.
QLT will receive a $20 million investment from healthcare investors, including Broadfin Capital LLC, JW Asset Management LLC and EcoR1 Capital LLC, following the completion of the InSite transaction.
“(After the Auxilium deal fell through) we had to regroup, feeling like we had won every battle but lost the war,” said Jason Aryeh, the chairman of QLT’s board. “The multiple deals that we are enacting here are incredibly innovative and creative.”
The Aralez transaction is expected to close in the fourth quarter, while QLT’s deal with InSite is expected to close in the third quarter.
Guggenheim Securities, Deutsche Bank, DLA Piper LLP and A&L Goodbody advised Pozen.
Bloom Burton & Co, KES VII Capital Inc. Fogler, Rubinoff LLP, Troutman Sanders LLP and Walkers advised Tribute.
Greenhill & Co, Weil, Gotshal & Manges LLP and McCullough O’Connor Irwin LLP advised QLT.
(Reporting by Olivia Oran in New York; Editing by Kenneth Maxwell)
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