Impax Labs on the hunt after striking two deals worth $700 mln
Oct 9 (Reuters) - Impax Laboratories Inc said it was on the hunt for further deals - and would consider a so-called "tax inversion" transaction - after its acquisition of two privately held Pennsylvania drugmakers for $700 million.
Impax's shares jumped as much as 17 percent to $17.85 in morning trading on the Nasdaq on Thursday.
The acquisition of Lineage Therapeutics Inc and Tower Holdings Inc, both based in Horsham, Pennsylvania, gave Impax access to an emergency anti-allergen injection, epinephrine.
Chief Executive Frederick Wilkinson said Hayward, California-based Impax was looking for more such deals.
"If (a deal) comes with an inversion or a tax benefit then we would not be afraid to pursue that," he said in a conference call with analysts.
U.S.-based companies, especially healthcare firms, have been merging with or acquiring a foreign company to change their tax base to avoid paying higher domestic taxes.
However, recent actions taken by the U.S. Treasury Department have come in the way of these "inversion" deals and have cast doubts on whether transactions that have not been completed could be effective.
Impax said besides epinephrine, Thursday's deal also includes six other generic products and a drug to treat parasitic worm infections, Albenza - all of which are on the market.
Lineage and Tower are expected to launch a further five drugs through 2014 and into 2015.
ANTI-ALLERGY BET
Epinephrine is used to fight sudden allergic reactions such as severe rashes and swelling of the windpipe. Most allergic reactions are caused by food, insect stings, medications and materials such as latex.
Four out of every 100 children in the United States have a food allergy, according to the U.S. Centers for Disease Control and Prevention.
Lineage sells a generic epinephrine drug administered through its USP auto-injector system. Tower makes Adrenaclick, the branded version of the drug.
Both products compete with Mylan Inc's EpiPen, far and away the leader in the nearly $1 billion market.
Tower and Lineage are expected to generate revenue of $215 million-$225 million in 2014. Analysts' currently expect Impax to post revenue of about $570 million, more than 90 percent of which is from the sale of generic products.
The deals are expected to add about 90 cents per share to Impax's 2015 earnings, which is more than double the 75 cents analysts currently expect the company to earn.
Impax's deal comes nearly two months after the U.S. Food and Drug Administration raised concerns about the company's factory in Taiwan, to where it had partially shifted after the FDA had raised similar concerns about its California plant.
The FDA's scrutiny had cast doubt on the future of Rytary, Impax's experimental Parkinson's drug and the only drug the company is developing on its own.
Impax's shares were up 10.7 percent at $26.38 in afternoon trading. Up to Wednesday's close, the stock had dropped 5.2 percent this year. (Reporting by Vidya L Nathan and Anjali Rao Koppala in Bangalore; Editing by Ted Kerr and Savio D'Souza)
