MAP Gets Inhaled by Allergan

Allergan (NYSE: AGN  ) announced Tuesday the acquisition of MAP Pharmaceuticals (UNKNOWN: MAPP.DL  ) for about $958 million in cash. The companies previously agreed to co-promote MAP's inhalable migraine treatment Levadex if it passed the Food and Drug Administration -- and that approval decision should arrive before mid-April.

Levadex received a complete response letter last spring based on issues at a third-party supplier, but the Food and Drug Administration accepted its next application. If approved, the drug would join Allergan's Botox injection, which has received numerous approvals worldwide for its use in treating chronic migraines. Levadex treats acute migraines, defined as occurring fewer than 15 days per month.

"We plan to capitalize on this depth of expertise in Neurology as we continue the global development of LEVADEX as a potential acute treatment for migraine that is complementary to BOTOX and use MAP's proprietary drug particle and inhalation technologies to generate new pipeline opportunities," Allergan CEO David E.I. Pyott said in the official release.

Research firm Decision Resources predicts that the global migraine market powered by these drugs will hit $5.8 billion by 2021.

Allergan will pay for MAP using a combination of cash on hand, cash equivalents, and short-term borrowings. The company predicts 2013 dilution of about $0.07 per share. Levadex should start appearing in Allergan's earnings by the second half of next year.

Allergen has a habit of acquisitions. The most recent was the $350 million purchase of "topical aesthetics" skincare business SkinMedica in November. The company has tightened its focus as it attempts to find a buyer for its weight loss segment, which includes Lap-Band.

Foolish final thoughts
Allergan made a smart move to obtain a drug it was going to co-promote. And the company can afford the acquisition. The most recent quarter reported about $2.7 billion in cash and equivalents. A conference call for the fourth-quarter and full-year reports are scheduled for February 5.

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