Actavis to Divest U.S. Doryx Rights Before Allergan Deal

Actavis PLC (ACT) will sell the U.S. rights to an acne treatment as it seeks to refine its dermatology portfolio ahead of its purchase of Botox maker Allergan Inc.

The Doryx deal, valued at about $50 million and expected to close by month's end, follows last week's announcement that AstraZeneca PLC (AZN) was buying Actavis" branded respiratory business in the U.S. and Canada for an initial $600 million.

Actavis' planned $66 billion purchase of Allergan--which trumped Valeant Pharmaceuticals International Inc.'s (VRX) long-running hostile bid, backed by billionaire hedge-fund manager William Ackman--is expected to close in the second quarter, making Actavis one of the world's largest drug makers by sales.

The combined Actavis-Allergan will be led by Actavis Chief Executive Brent Saunders, who has overseen Actavis's rapid growth with more than $100 billion in mergers and acquisitions in a little more than a year, capped by the deal for Allergan.

Dublin-based Actavis currently licenses and distributes Doryx in the U.S. as part of a partnership with Warner Chilcott PLC, which Actavis bought in 2013, and Australian specialty pharmaceutical company Mayne Pharma Group Ltd. (MYX.AU).

Doryx is an oral tablet used for severe acne and as a treatment for certain bacterial infections.

Mayne Pharma said it expects the product to add an average $2.7 million a month in earnings before interest, tax, depreciation and amortization beginning in July.

Under the terms of the agreement, Actavis will continue to package, distribute and promote the acne treatment until May 2.

In May, Mayne Pharma will establish a U.S. specialty brands division, staffed by 66 workers, including the former vice president of Warner Childott's U.S. commercial operations, Andy McClenaghan.

Mayne Pharma currently has two drug development and manufacturing facilities, based in Australia and Greenville, N.C.

Michael Calia contributed to this article.

Write to Maria Armental at [e-mail] and to Robb M. Stewart at [e-mail]

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