Allergan (AGN) May Pay A Lot Of Money For This Company

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Pharmaeutical titan, Allergan, is acquiring Tobira Therapuetics in a deal that’s initially for $28.35 per share. According to a statement however from Allergan, the deal could grow far more expensive.

Tobira is developing two drugs to treat NASH disease, a silent and often common liver disease. According to the Allergan statement, NASH is a buildup of fat in the liver for unknown reasons that can eventually lead to liver failure.

Tobira has two drugs under development, that when used together could help treat NASH. They are Cenicriviroc and Evogliptin.

So why would the price tag increase for Tobira? In the event that the drugs meet certain thresholds, Tobira could cost a lot more for Allergan.

“Allergan will acquire Tobira for an upfront payment of $28.35 per share, in cash, and up to $49.84 per share in Contingent Value Rights (CVRs) that may be payable based on the successful completion of certain development, regulatory and commercial milestones, for a total potential consideration of up to $1.695 billion,” the Allergan release said.

If Tobira’s drugs make it to market, the acquisition price would double.

Tobira shares closed on Monday at $4.74 a share and with a market cap of just $89 million.

“With the increasing rates of diabetes, obesity, and other metabolic conditions in the US and in developed nations globally, NASH is set to become one of the next epidemic-level chronic diseases we face as a society,” Allergan CEO Brent Saunders said in the statement announcing the move.

“It is important that we invest in new treatments today so that healthcare systems, providers, and patients have treatment options to face this challenge in the coming years.”

Disclaimer: We have no position in Allergan (NYSE: AGN) and have not been compensated for this article.