Alkermes, Reliant cancel merger
On August 14, drug delivery firm Alkermes (Cambridge, MA) and specialty pharmaceutical firm Reliant Pharmaceuticals (Liberty Corner, NJ) terminated their merger, citing “general market conditions” as the deal-buster. Alkermes had announced on March 21 that it would pay over $900 million in stock (based on its then share price of $30.05) for Reliant (Nat. Biotechnol. 20, 422, 2002). The original terms stated that either firm could cancel the deal if Alkermes common stock fell below $17.70 for the ten trading days before the transaction close. The deal was already in jeopardy in late June, when Alkermes common stock traded for 14 days at an average of $16.30, but the fatal blow came on June 28 when the US Food and Drug Administration (FDA) issued a non-approvable letter related to Risperdal Consta, Alkermes' formulation of an anti-psychotic drug, and the firm's share price dropped to $5.15. Even when Risperdal Consta gained marketing approval in Europe (see
New Product Approvals
), Alkermes shares rose only to $10. The firms stated that the merger cancellation will not affect their 2001 development and commercialization agreement. Steve Burrill, CEO of life sciences merchant bank Burrill & Co. (San Francisco, CA), says that neither the buyer nor the seller is very motivated to do much at today's values. “And the strategic alliance is a far more efficient way to extract the value than is the acquisition,” says Burrill. AB
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