TOKYO–(BUSINESS WIRE)–Otsuka Pharmaceutical Co., Ltd. is pleased to announce an agreement with Avanir Pharmaceuticals, Inc.(AVNR) (“Avanir”) in which Otsuka America, Inc., a US subsidiary, acquires Avanir for USD 3.5 billion in an all-cash tender offer. The contract was signed on December 2, Japan time.

Avanir Pharmaceuticals

Avanir is a biopharmaceutical company specializing in CNS diseases. It was founded in 1988 in Southern California and now employs approximately 500 people. Avanir developed and launched NUEDEXTA® (dextromethorphan hydrobromide/quinidine sulfate) 20mg/10mg capsules in the US in February 2011 as the world’s first and only approved treatment for the neurologic disease pseudobulbar affect (PBA). Sales of NUEDEXTA in the twelve-month period from July 2013 through June 2014 were USD 94 million, a 50% increase over the prior-year period.

Avanir markets NUEDEXTA in the US through its own sales organization of over 300 sales representatives, 150 of whom were recently hired to accelerate the continued growth of NUEDEXTA for PBA. The company’s pipeline includes programs in Alzheimer’s disease, Parkinson’s disease, migraine, and other CNS indications. The promising new chemical entity AVP-786, with a target indication for agitation associated with Alzheimer’s disease, is being prepared to enter Phase III clinical trials.

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Objectives of the acquisition

The acquisition of Avanir will bring Otsuka three distinct values: 1) NUEDEXTA, created to treat the under-recognized, neurologic disease PBA; 2) the late-stage investigational compound AVP-786 in clinical development to treat agitation associated with Alzheimer’s disease and; 3) Avanir’s clinical development and commercial expertise in neurologic diseases, which complements Otsuka’s capabilities in psychiatric diseases. These will accelerate Otsuka’s existing expansion strategy in the neurologic area, widening the overall CNS portfolio, inclusive of the psychiatric and neurologic areas, supporting both short-and medium-term growth.

This acquisition is consistent with the Otsuka Group’s investment philosophy: invest in companies and businesses with which we can share a common management philosophy, human resources, products and technology to enhance corporate value; and invest with long-term perspective. The acquisition is based on the concepts of creativity and proof through execution that Otsuka esteems.

Creativity and proof through execution

Avanir has successfully taken on the challenge to create, develop and commercialize a drug in a new disease category PBA, for which no approved treatment existed. Avanir’s approach to creativity is remarkably consistent with Otsuka’s. The former has demonstrated strengths in neurologic diseases such as PBA whereas the latter has demonstrated strengths in psychiatric diseases such as schizophrenia, manic and mixed episodes of bipolar I disorder and adjunctive treatment of major depressive disorder. Furthermore, the October 2013 addition to the Otsuka Group of Astex Pharmaceuticals’ Cambridge Research Institute, with its fragment-based drug discovery technology, will reinforce the integrated creative capacity of the three companies, accelerating and strengthening opportunities in the CNS field.

NUEDEXTA, a treatment for PBA (pseudobulbar affect), a neurologic disease

PBA is a neurologic condition characterized by sudden and uncontrollable, disruptive laughing and/or crying outbursts that are often contrary or exaggerated in relation to the patient’s inner mood state. As a result, many of those afflicted with PBA show significant impairment on standard measures of health status, and impairments in occupational and social function, often leading to social isolation. PBA occurs secondary to a variety of neurologic conditions such as traumatic brain injury (TBI), multiple sclerosis (MS), amyotrophic lateral sclerosis (ALS), Parkinson’s disease, stroke and Alzheimer’s disease. When these disorders damage areas of the brain that regulate normal emotional expression, they can lead to uncontrollable, disruptive episodes of crying or laughing.i

In the US, the potential number of patients is estimated to be approximately two million people. The disease was neglected for many years in absence of an approved treatment. NUEDEXTA is an innovative combination of two well-characterized components; dextromethorphan hydrobromide (20mg), the ingredient active in the central nervous system, and quinidine sulfate (10mg), a metabolic inhibitor enabling therapeutic dextromethorphan concentrations. Dextromethorphan acts on the sigma-1 and NMDA receptors in the brain, although the mechanism by which NUEDEXTA exerts therapeutic effects in patients with PBA is unknown.

Drug development for agitation associated with Alzheimer’s disease

Up to 50% of patients with Alzheimer’s disease experience agitation, which can manifest as verbal abuse, confusion, and aggression.ii Dementia-related behavioral symptoms, including agitation, increase the burden on caregivers and can be extremely distressing to the individual, the family, and caregivers. These behavioral disturbances have been associated with more rapid cognitive decline, institutionalization and increased caregiver burden.