Allergan (NYSE:AGN) has agreed to acquire Tobira Therapeutics Inc (NASDAQ:TBRA) as it looks to get its hands on Tobira’s potentially lucrative experimental liver disease treatments.
News of the deal sent Tobira shares skyrocketing up to near the US$40 mark, levels it hasn’t seen for more than two years.
The acquisition, which could be worth up to US$1.7bn, will see Allergan pay US$28.35 per Tobira share up front, and up to US$48.94 a share contingent on the firm reaching certain milestones.
The initial payment alone is an incredible 500% premium on Monday’s close price. Tobira now has a market value of over US$700mln, up from US$89mln just last night.
Tobira is focused on developing and commercialising treatments for non-alcoholic steatohepatitis, also known as NASH, a common liver disease usually associated with obesity and type-2 diabetes.
“With the increasing rates of diabetes, obesity and other metabolic conditions in the U.S. and in developed nations globally, NASH is set to become one of the next epidemic-level chronic diseases we face as a society,” said Allergan chief executive Brent Saunders.
About 30% of people in the United States already suffer from fatty liver diseases such as NASH according to the American liver foundation, with that figure predicted to rise.
Tobira’s lead product candidate, cenicriviroc, suffered a setback over summer after it missed the primary endpoint of its mid-stage trial.
It did hit one of the secondary endpoints and Tobira said it would discuss with regulators the design of the next study.
Dublin-based Allergan will also acquire another experimental NASH treatment in the form of evogliptin, which is in early-stage studies.
Shares in Tobira were up 718% to US$38.75, while shares in Allergan were down 2% to US$240.24.