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Adamas, Flexion sell for $825M combined as biotech’s dealmaking pace picks up

The two deals announced Monday are attempts by Supernus and Pacira to fold small, revenue-generating drugs into a larger portfolio and boost their prospects.

Supernus, for example, owns six products for neurological conditions like Parkinson’s and migraines that, combined, earned $520 million last year. Acquiring Adamas gives the company two more Parkinson’s treatments in Gocovri and Osmolex. Gocovri recorded sales of just $71 million in 2020, while Osmolex, in the hands of its former owner Osmotica Pharmaceuticals, generated revenue so low the company took an $18 million impairment charge in 2019.

Pacira, meanwhile, recorded $413 million in 2020 sales from a post-surgical pain reliever called Exparel. By acquiring Flexion, Pacira will add Zilretta, an injection for arthritis pain in the knee. Zilretta recorded roughly $86 million in sales in 2020.

Both acquiring companies aim to rapidly increase those sales numbers, and are promising deal payouts if they succeed. The Pacira offer, worth $8.50 a share, could include an additional payment of up to $8 per share if Zilretta achieves a series of sales milestones and two other Flexion projects win U.S. approval. Those goals must be met by the end of the decade, Pacira said in a statement.

Supernus, meanwhile, could pay Adamas stockholders as much as $1 per additional share if Gocovri reaches $225 million in yearly sales.

Those extra payments, called contingent value rights, are often included in biopharma acquisitions when the buyer and the target company can’t agree on how to value a specific product, and can be traded on a stock exchange. Frequently, however, the CVRs end up worthless as the products fail to achieve the sales and development goals outlined in the acquisition.

At the up-front price of $8.50, Pacira’s offer for Flexion represents a 47% premium over Friday’s closing price, the eighth highest of 2021. Supernus’ per-share offer of $8.10 for Adamas, meanwhile, represents a 76% percent premium, the year’s fifth largest.