Akorn (AKRX) is trading sharply higher today (+10%) as the company has confirmed reports that it's in discussions with Fresenius (FSNUY), a large healthcare company based in Germany, whereby Fresenius may acquire Akorn.
In terms of background, Akorn is a Chicago area-based generic drug company with a niche focus on alternative dosage forms. Rather than focusing on pills taken by mouth, Akorn focuses mostly on prescription drugs with alternative delivery methods, such as injectable, ophthalmic, topical, oral and inhaled liquid, nasal spray and otic dosage forms. It does sell some select oral solid dose formulations. While Akorn is primarily a generic drug company, it also sells a portfolio of branded prescription pharmaceuticals, primarily in the ophthalmology area.
Also, while most of its drugs are prescription level, Akorn does sell some OTC products, both its own brands and some private-label OTC pharmaceutical products. Its flagship OTC brand is TheraTears Therapy for Your Eyes, which is a family of therapeutic eye care products including dry eye therapy lubricating eye drops, eyelid and eyelash cleansing foam and eye nutrition supplements. Other OTC products include Zostrix, Sinus Buster, MagOx, Maginex, Multi-betic, Diabetic Tussin and Dia-Derm. Akorn also sells some branded and generic companion animal prescription pharmaceutical products under the Akorn Animal Health label.
Akorn considers its focus on dosage forms outside of oral solid dose to be "alternative dosage forms." These products typically have fewer competitors in mature markets, are more difficult to develop and manufacture and can carry higher profitability over time than oral solid dose products. Its manufacturing network specializes in alternative dosage form products.
Turning back to today's news, Akorn says there can be no assurance any transaction will result from these discussions, or as to the terms of any such transaction. Neither Fresenius nor Akorn intend to make any additional comments regarding these negotiations unless and until it is appropriate to do so, or a formal agreement has been reached.
Akorn's stock price jumped late in the day on Friday when some news reports hit the wires that the companies were talking. Then after the close on Friday, Akorn confirmed that they were in discussions. Prior to the jump in the stock price on Friday, Akorn's share price has been in a steady downturn trend since April 2015 when it was trading above $55, it has been in the $20-25 range the past few months. Akorn has been hurt by increased competition and pipeline delays.
In sum, investors are happy to see that Akorn may get acquired. Also, it could spark some buying in some other generic drug stocks that have been weak recently, including Perrigo (PRGO), Lannett (LCI), Mylan (MYL), Mallinckrodt (MNK). So we would keep an eye on the generic space overall.