File photo of chairman and chief executive officer Michael Pearson of Valeant Pharmaceuticals.CHRISTINNE MUSCHI/Reuters
Valeant Pharmaceuticals International Inc.'s proposed acquisition of Salix Pharmaceuticals Ltd. and another recent deal position the company to expand in two new high-growth therapeutic areas, Valeant senior executives say.
The $10.4-billion (U.S.) agreement to acquire Salix, announced Sunday, and last week's $495-million acquisition of the rights to a prostate cancer vaccine and other assets from Dendreaon Corp., give Valeant a strong presence in two new markets – gastrointestinal disorders and oncology – chairman and chief executive officer Michael Pearson said Monday on a conference call.
And there is sufficient financial flexibility, even with the $15-billion in debt being taken on to finance the Salix deal, for smaller acquisitions to add to Salix's existing assets, chief financial officer Howard Schiller said on the analysts' call.
"We will still have the ability to do small tuck-ins," he said.
The Dendreon assets also provide a platform for tuck-in acquisitions, Mr. Pearson said.
Shares of Valeant closed up 15 per cent to $250.13 (Canadian) on the Toronto Stock Exchange on Monday.
Laval, Que.-based Valeant's two key existing areas are dermatology and ophthalmology.
Salix, Valeant's single biggest acquisition to date, markets one brand drug in particular that has significant potential as a the treatment for irritable bowel syndrome with diarrhea if it gets approval from the U.S. Food and Drug Administration.
Valeant management is confident the drug – Xifaxan – will get FDA approval, hopefully by spring, Mr. Pearson said.
Among Salix' other products are drugs to treat ulcerative colitis and travelers' diarrhea.
Also on Monday, Valeant posted fourth-quarter profit of $534.9-million (U.S.) or $1.56 per share, up from $123.8-million or 36 cents in the year-earlier period. Revenue was $2.28-billion, compared with $2.06-billion.
"We like the growing Salix products, which have solid [payer] reimbursements, and the overall gastrointestinal therapeutic category, which continues to grow nicely," UBS Securities analyst Marc Goodman said in a research note.
"And the space should provide multiple future business development opportunities to leverage [Valeant's] new footprint in this area."
For Valeant, the Salix deal – barring the emergence of a competing bid, as one analyst has speculated – is a consolation prize for losing out in its $54-billion hostile offer for Botox-maker Allergan last year. Actavis PLC trumped its bid with a $66-billion friendly proposal.