Israeli bio-tech company Teva Pharmaceutical (ARCA:TEVA) announced on March 30th that it will acquire neurology drug company Auspex Pharmaceuticals (NASDAQ:ASPX) for an equity value of $3.5 billion in an effort to expand its treatments for the central nervous system.
Teva will purchase Auspex for $101 a share, implying a 42.4% premium from where the stock closed at on Friday, March 27th. The acquisition comes after a year Teva refocused on reducing costs under its new CEO, Erez Vigodman. The decision to merge with Auspex came to be after Vigodman determined Teva was ready to start making more acquisitions.
Auspex’s main product is called SD-809 and is meant to treat chorea, abnormal involuntary movement associated with Huntington’s disease, tardive dyskinesia, and Tourette syndrome. SD-809 for Huntington’s is slated to gain regulatory approval by the FDA and be launched in 2016.
Michael Hayden, Teva’s chief scientific officer, said Auspex’s technology could represent “a significant breakthrough for patients who often have no sustainable symptom relief from their disease.”
Teva predicts that Auspex will rake in $2 billion in sales by 2020.
A handful of analysts weighed in on Auspex Pharmaceuticals following Teva’s acquisition announcement.
On March 31st, Stifel Nicolaus analyst Stephen Willey downgraded his rating on Auspex Pharmaceuticals to hold with a $101 price target. Overall, he has a 69% success rate recommending stocks and a +36.1% average return per recommendation.
Similarly, Robet W. Baird analyst Christopher Raymond also downgraded his rating on Auspex Pharmaceutcals to Hold with a price target of $101. The analyst has an overall success rate of 83% recommending stocks and a +39.8% average return per recommendation.
On average, the top analyst consensus for Auspex Pharmaceuticals on TipRanks is Hold.