Let's take a look at five stocks -- Rockwell Medical (NASDAQ: RMTI ) , AbbVie (NYSE: ABBV ) , Shire (NASDAQ: SHPG ) , Allergan (NYSE: AGN ) , and Valeant Pharmaceuticals (NYSE: VRX ) -- which could all loom large in health care headlines this Monday morning.
FDA approves Rockwell Medical's Calcitriol
Rockwell Medical is up nearly 8% in pre-market trading after the FDA approved Calcitriol, its low-cost vitamin D injection for patients undergoing chronic renal dialysis. Vitamin D deficiency is common in dialysis patients, and can cause elevated parathyroid hormone levels (PTH) which lead to various bone and joint problems. During clinical trials, Calcitriol was shown to significantly reduce PTH levels.
The majority of Rockwell Medical's revenue is generated by hemodialysis concentrates and dialysates. Investor interest in two newer products -- Triferic and Calcitriol -- have caused the stock to rally 190% over the past 12 months.
Triferic is currently under FDA clinical review as an iron replacement treatment for dialysis patients. The FDA has scheduled a PDUFA action date for Triferic on January 24, 2015.
Triferic is expected to generate annual peak sales of $150 million to $250 million, and Calcitriol is expected to generate annual sales between $20 million to $138 million -- both of which would be big boosts for Rockwell, which only reported $52.4 million in sales in 2013.
AbbVie reportedly mulling a new bid for Shire
Meanwhile, AbbVie is reportedly mulling a new takeover bid for Shire after its $46.3 billion offer was rejected last week. Shire stated that the offer -- the third unsolicited one from the AbbVie -- significantly undervalued the company. Shire has also published "The Path to U.S. $10 Billion in Product Sales by 2020" on its website to explain why AbbVie's offer was too low.
AbbVie is now considering a new bid. Acquiring Shire would benefit AbbVie in three major ways.
First, it would allow Illinois-based AbbVie to move its tax domicile to Ireland, where Shire is based, resulting in lower corporate taxes. Second, it would gain Shire's lucrative portfolio of ADHD drugs, which accounted for 41% of its revenue last year. Sales of Shire's top ADHD drug, Vyvanse, rose 19% year-over-year in 2013 to $1.2 billion and is expected to hit peak sales of $3.5 billion. Third, Shire acquired ViroPharma last year, which added Cinryze, the only approved preventative treatment for hereditary angioedema (HAE), to its portfolio. Cinryze is expected to generate peak sales of around $600 million based on North American sales alone.
Shire's ADHD drugs and Cinryze would help AbbVie diversify its portfolio away from its blockbuster rheumatoid arthritis drug Humira, which accounted for more than half of its $18.8 billion top line last year with $10.7 billion in sales. However, Humira will lose U.S patent protection in late 2016.
Investors should note that AbbVie is not Shire's only potential suitor. Allergan, which is now being targeted by Valeant, is also reportedly interested in acquiring the company.
Allergan rejects Valeant again
Speaking of Allergan, the company's board of directors just rejected Valeant's latest takeover offer of $72 in cash plus 0.83 shares of Valeant for each share or Allergan -- for a total value of $52.7 billion.
Allergan's reason was the same as before -- it believes that Valeant undervalues the company and creates significant risks for Allergan shareholders. The company has strongly recommended that Allegan shareholders to not tender any of their shares to Valeant.
Valeant is trying to acquire Allergan for two key reasons -- its cosmetic and eye drugs. Allergan is guiding for its top cosmetic drug, Botox, to generate $2.18 billion to $2.28 billion in sales in 2014. Allergan's top eye drug, Restasis, is expected to generate sales of roughly $1 billion by the end of the year.
Valeant has been pursuing an aggressive strategy of inorganic growth over the past few years. It acquired eye care giant Bausch & Lomb in 2013, then acquired a portfolio of cosmetic and dermatological products through its acquisitions of Solta Medical and Medicis Pharmaceutical.
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