Gastrointestinal treatments company Salix Pharmaceuticals (NASDAQ:SLXP) will acquire Oceana Therapeutics for $300 million cash in a deal that brings two more products to its portfolio — both of them medical devices.
Morrisville, North Carolina-based Salix announced the deal after the close of the financial markets and discussed the acquisition during its third quarter conference call. Oceana, based in Edison, New Jersey, has two U.S. Food and Drug Administration approved products. Solesta treats fecal incontinence; Deflux treats vesicoureteral reflux, or VUR, an anatomical bladder defect affecting children. Deflux is the only surgical alternative approved by the FDA as a treatment for VUR. Approved by the FDA in 2009, Deflux generated about $26 million in revenues through the first three quarters of this year. The product has approval in more than 40 countries. But it’s Solesta that is viewed as the bigger prize in the acquisition. Although Solesta was just approved in May as a class III medical device, Salix believes it has greater potential and projects sales of the product could reach $500 million.
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Solesta treats patients who have fecal incontinence. An estimated 15 percent of people in the United States over 50 have the condition. Some patients turn to diarrhea products such as Imodium or fiber. In serious cases, patients may turn to surgery. Salix CEO Carolyn Logan said that Solesta falls in between and would even be preferable to surgery because it poses less risk of complications. Solesta is an injectable gel that can be administered on an outpatient basis without anesthesia.
Oceana launched Solesta in September. Logan said she expects the product will be reimbursed by the Centers for Medicare & Medicaid Services. The product also has regulatory approval in Europe. Logan said that Solesta fits with Salix’s specialty sales force that is already in contact with gastroenterologists and colorectal surgeons.
Although Solesta received FDA approval as a medical device, Logan said Salix views the product as a drug. As an injectable, Solesta is similar to the company’s product Relistor, which is used to treat constipation caused by narcotic medications. Salix licensed Relistor earlier this year for $60 million up front. Logan said that Salix will continue to explore additional deals but the Oceana acquisition should not be viewed as a strategic move into medical devices. Any GI products would be fair game.
“It doesn’t mean we would look at more medical devices and diagnostics,” she said. “It doesn’t mean we wouldn’t either.”
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The sale is subject to customary closing conditions, including regulatory approval. Salix expects to close the deal in December.
