Mergers And Acquisitions: Actavis will acquire antibiotic maker Durata

In the latest chapter in the saga of the antibiotic dalbavancin, Actavis will acquire its developer, Durata Therapeutics, for $675 million.

Dalbavancin, marketed as Dalvance, was approved in May after a nearly 20-year odyssey from discovery to market, comprising many owners and regulatory setbacks. Durata paid a mere $10 million in 2009 to buy the compound from Pfizer, which had acquired it in 2005 through the $1.9 billion acquisition of Vicuron.

Vicuron first filed for FDA approval of dalbavancin in 2004 as a treatment for serious skin infections. But the drug, a second-generation semisynthetic lipoglycopeptide, languished after the agency changed the goalposts for antibiotic studies.

ISI stock analyst Umer Raffat calls the deal “okay” but “not a home run,” noting that Dalvance’s key advantage over other gram-positive antibiotics—a long-acting formulation—might not be enough to keep up sales next year when Pfizer’s Zyvox loses patent protection and low-priced generics proliferate.

For Actavis, the acquisition caps a rapid transformation that began in 2012 when the firm merged with Watson Pharmaceuticals. Then last October, Actavis paid about $5 billion for Dublin-based Warner Chilcott and moved its headquarters to Ireland. In February, Actavis shelled out $25 billion to acquire Forest Laboratories.

At the time, stock analysts expected Actavis to pursue other deals, and ISI’s Raffat says Actavis still has enough cash. Indeed, rumors surfaced last week that Actavis is in talks with Allergan, which for months has been battling a takeover by Valeant Pharmaceuticals.