In ADHD Play, Pfizer Inks $700M Deal For NextWave Pharma (Law360)

By Jeff Overley

In a wager that reflects spiking rates of childhood behavioral ailments, Pfizer Inc. said Monday it will pay up to $700 million for NextWave Pharmaceuticals Inc., which recently won regulatory approval of Quillivant XR, the first once-daily liquid treatment for attention deficit hyperactivity disorder.

The purchase price for the California-based company, which three weeks ago earned U.S. Food and Drug Administration backing for Quillivant, includes a $20 million option payment, a $255 million payment Pfizer will make when the deal closes and $425 million in incentive payments based on sales targets.

The deal is expected to close in the fourth quarter of 2012, shortly before Quillivant hits pharmacy shelves in January, offering what's billed as an extra-convenient option in the market for ADHD drugs. Pfizer said its "commercialization expertise" will help make the most of the treatment's moneymaking potential.

Quillivant's active ingredient, methylphenidate, has long been a hallmark of care for ADHD, appearing in well-known drugs such as Novartis AG's Ritalin and Janssen Pharmaceuticals Inc.'s Concerta. While extended-release formulations exist, Quillivant's liquid form "fills a void" for patients who have trouble swallowing pills, NextWave said last month.

According to NextWave, a clinical trial of 45 children with ADHD delivered maximum doses of 60 milligrams per day and "showed significant improvement at every time point measured, from 45 minutes to 12 hours after dosing."

As of 2007, as many as 5.4 million children, or 9.5 percent of all kids, had been diagnosed with ADHD, which is among the most prevalent cognitive disorders afflicting youths, according to the Centers for Disease Control and Prevention. Diagnosis rates climbed an average of 3 percent yearly from 1997 to 2006 and 5.5 percent annually from 2003 to 2007, according to the CDC.

The condition, believed to be influenced by genetic factors, is characterized by inordinate trouble paying attention, fidgeting, speaking before thinking, interrupting others and forgetfulness. Like autism, which affects one in 88 kids, it has bedeviled parents and driven a boom in pharmaceutical sales for otherwise healthy youngsters.

Pfizer's acquisition comes less than one week after the Federal Trade Commission cleared Watson Pharmaceuticals Inc.'s proposed $5.5 billion purchase of Actavis Inc. after the generics maker agreed to divest 18 of its drugs, including those used to treatment anxiety and ADHD, to competitors to allay antitrust concerns.

In addition to deals, manufacturers of ADHD drugs have taken part in widespread intellectual property litigation this year.

Last month, Impax Laboratories Inc. inked a deal with Johnson & Johnson subsidiaries that gave it licensing rights to produce generic Concerta, ending a lengthy patent infringement battle. And Eli Lilly & Co. in March ended a lawsuit against Zydus Pharmaceuticals USA Inc., after the companies reached an agreement resolving Eli Lilly's claims that the generics maker had infringed its Strattera ADHD medicine.

Mylan Inc. and Johnson Matthey Inc. in February became the latest targets of drugmaker Shire LLC's ongoing efforts to protect its patents for ADHD treatment Vyvanse. And In April, Belgian pharmaceutical giant UCB Inc. slapped Covidien PLC subsidiary Mallinckrodt Inc. with a patent infringement suit aimed at protecting its Metadate ADHD drug.

Pfizer is represented by Adam Golden, Lowell Dashefsky and associate Holly Holloway of Kaye Scholer LLP and Ropes & Gray LLP.

NextWave is represented by Barbara Kosacz, Laura Medina, Barclay Kamb, Renee Deming, Francis Fryscak, Buff Miller, Kevin Chen, Steve Hwang and Michael Baker of Cooley LLP.

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Related Contacts
Barbara Kosacz Partner, Palo Alto
Barclay Kamb Senior Counsel, Palo Alto
Laura Medina Partner, Colorado
Buff Miller Senior Counsel, Palo Alto
Renee Deming Retired Partner, Palo Alto
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Mergers & Acquisitions