By Stuart Pfeifer
12:02 PM EST, February 11, 2014
Ireland pharmaceutical company Mallinckrodt has agreed to acquire San Diego company Cadence Pharmaceuticals for about $1.3 billion in an effort to boost its specialty drugs portfolio.
Cadence, which commercializes drugs that are used in hospitals, is best known for Ofirmev, an injectable version of the drug acetaminophen, the active ingredient in Tylenol. Launched in January 2011, Ofirmev has been used to treat an estimated 6 million to 7 million patients.
“The acquisition of Cadence Pharmaceuticals is consistent with our goal of becoming a leading global specialty pharmaceuticals company,” said Mark Trudeau, chief executive of Mallinckrodt. "Ofirmev’s growth is driven by an expanding base of physicians who are prescribing the product for an increasing number of surgical patients, and we believe the product will be an outstanding addition to the brands component of Mallinckrodt’s specialty pharmaceutical segment.
"We have been impressed with the strong relationships that Cadence’s commercial organizations have established with customers in the hospital channel and are excited by the opportunity to build on these relationships to expand our platform in this area."
Cadence shares surged $2.91, or 26%, to $13.98 in morning trading.
“We are very proud of what our employees have accomplished, and in particular the very strong growth we have achieved with Ofirmev,” said Ted Schroeder, chief executive of Cadence Pharmaceuticals. “The relationships we’ve established with our customers and the benefits the drug has provided to millions of patients across the U.S. have contributed to the strong year-on-year growth we’ve seen for the product since launch.
"We believe Mallinckrodt is a natural fit to provide the resources and expertise that can expand patient access for Ofirmev. Additionally, this transaction will provide Cadence shareholders with a strong return on their investment.”
Mallinckrodt agreed to pay $14 per share for the company, a 27% premium to Cadence's Monday closing price of $11.07. The boards of both companies have approved the deal.
The acquisition, expected to close in March, will "significantly" boost Mallinckrodt's earnings per share, the company said in a news release.
Mallinckrodt shares were up $5.71, or 10%, at $65.02 Tuesday morning. The company reported net sales of $2.2 billion in its 2013 fiscal year, up from $2.1 billion the prior year. It has traded on the New York Stock Exchange since July, when it separated from former parent company Covidien.
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