Canceled Buyout Snatches Victory From Victory Pharma’s Investors

Xconomy San Diego — 

Victory is not yet in sight for San Diego’s Victory Pharma, a specialty drug company focused on pain relievers. A Japanese drug marketer backed out of a $150-million deal to acquire Victory this week, leaving the San Diego pain specialist in need of solace and a new game plan.

Sciele Pharma said in a press release that the companies called off the acquisition because of “an unforeseen development that occurred after the agreement was signed.” Sciele, an Atlanta, GA, unit of Japan’s Shionogi & Co., didn’t elaborate and Victory spokesman and CFO David J. Parker did not return calls.

Although the reasons for the breakup are a mystery, it is worth noting the deal fell apart less than two weeks after an FDA advisory committee called for tougher restrictions on drugs containing the pain reliever acetaminophen, which is found in two Victory products. The FDA committee called for an outright ban on drugs that combine acetaminophen and narcotics, such as Victory’s Xodol, a combination of acetaminophen and hydrocodone. Another Victory pain pill, Dolgic plus, combines caffeine, acetaminophen and butalbital, a barbiturate.

Acetaminophen is the active ingredient in over-the-counter pain relievers like Tylenol, and billions of doses of acetaminophen are safely used every year. But the advisory committee’s concern was focused on acetaminophen overdoses, which can cause liver damage and death. The FDA isn’t required to follow the advice of its committees, but the agency typically does.

Victory markets a total of four prescription drugs, so a ban on one or two of its products would be a significant blow. The venture-backed company had sales of $57 million in 2008, and its lead product was a sustained-release formulation of the pain reliever naproxen sodium. In announcing the acquisition of Victory in May, Sciele said its parent had targeted pain as an area for growth.

Victory’s pipeline includes a MGX006, an experimental treatment for severe nausea and vomiting. The company said this week that it expects to launch the drug during the first half of 2010, pending FDA approval. About 25 million prescriptions are written in the US annually for anti-emetic drugs, according to Victory, which sees opportunity in that market. With luck, MGX006 will help Victory Pharma live up to its name.