Zacks_Analysts' Blog : Axcan to Acquire Eurand - Analyst Blog

Axcan Holdings Inc. recently announced that it plans to acquire all the outstanding shares of Eurand NV (EURX) for $583 million or $12.00 per share. Axcan plans to commence a tender offer for all the outstanding shares of Eurand shortly, with the intention of closing the deal in the second quarter of 2011.

With the acquisition of Eurand, Axcan will gain access to Eurand’s lead product, Zenpep, which is marketed in the United States since November 2009, for the treatment of exocrine pancreatic insufficiency (EPI) due to cystic fibrosis.

The drug accounted for more than 50% of Eurand’s third quarter fiscal 2010 revenues.  Further, during the third quarter of 2010, Zenpep’s total prescription share went up to 19% from 12%. Moreover, in the six months from April 23, 2010, to October 22, 2010, Zenpep’s market share shot up to 20% from 6%.

Zenpep is currently in a late-stage trial in Europe, in patients with EPI due to cystic fibrosis. Eurand intends to out-license the ex-US distribution rights to the drug, and is in discussions with potential partners.

Zenpep faces competition from products of Abbott Laboratories (ABT) and Johnson & Johnson (JNJ).

Neutral on Eurand

We currently have a Neutral recommendation on Eurand, which is supported by a Zacks #3 Rank (short-term Hold rating). We view the acquisition of Eurand by Axcan as a positive as the combined company will have an enhanced presence in the specialty pharmaceuticals sector.

Additionally, with the Zenpep franchise expected to grow for the rest of 2010 and into 2011, we view this deal as a major milestone for both the companies.