Merck to Acquire Inspire Pharmaceuticals, Inc.


April 5, 2011 8:30 am ET

Expands and positions ophthalmology portfolio for future growth

Merck (NYSE:MRK), known as MSD outside the United States and Canada, and
Inspire Pharmaceuticals, Inc. (NASDAQ: ISPH) today announced that they
have entered into a definitive agreement under which Merck will acquire
Inspire, a specialty pharmaceutical company focused on developing and
commercializing ophthalmic products.

“Merck continues to build upon its long-term commitment to improving
therapeutic options for the treatment of eye diseases”

Under the terms of the agreement, Merck, through a subsidiary, will
commence a tender offer for all outstanding common stock of Inspire at a
price of $5.00 per share in cash, a 26 percent premium to the closing
price of Inspire’s common stock on April 4, 2011. The transaction has a
total cash value of approximately $430 million. The transaction has been
unanimously approved by the boards of directors of both companies and
Inspire’s board recommended that the company’s shareholders tender their
shares pursuant to the tender offer. In addition, Warburg Pincus Private
Equity IX, L.P., which owns approximately 28 percent of the outstanding
shares of Inspire, has agreed to tender all of its shares into the offer.

“Merck continues to build upon its long-term commitment to improving
therapeutic options for the treatment of eye diseases,” said Beverly
Lybrand, senior vice president and general manager, neuroscience and
ophthalmology, Merck. “This acquisition combines the talented
commercialization organization at Inspire with the excellent team
already in place at Merck thereby strengthening our ophthalmology
business and positioning us for future growth with an expanded
portfolio. This deal helps address the needs of patients and customers
in ophthalmology and creates value for both companies.”

In March, 2011, Merck announced that the New Drug Application (NDA) for
SAFLUTAN® (tafluprost), an investigational preservative-free
prostaglandin analogue ophthalmic solution, had been accepted for
standard review by the U.S. Food and Drug Administration (FDA). SAFLUTAN
is the proposed trade name for tafluprost in the United States.

“As one of the world’s leading healthcare companies, Merck is the ideal
partner to enhance the long-term potential of Inspire’s portfolio of
ophthalmic assets. We are delighted that Merck recognized the strength
of an integrated platform leveraging the growing AZASITE®
(azithromycin ophthalmic solution) 1% product opportunity and the strong
relationships within the ophthalmic community cultivated by our high
quality, specialty eye care sales force in the U.S.,” said Adrian Adams,
president and CEO of Inspire. “Based upon an extensive analysis of
various strategic options, as I have outlined since we announced the
results of the TIGER-2 Phase 3 clinical trial, we believe this
combination provides a compelling and timely opportunity for our
shareholders to realize the value of their investment in Inspire.”

The closing of the tender offer will be subject to certain conditions,
including the tender of a number of Inspire shares that, together with
shares owned by Merck, represent at least a majority of the total number
of Inspire’s outstanding shares (assuming the exercise of all options
and vesting of restricted stock units), the expiration of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act and other
customary conditions. Upon the completion of the tender offer, Merck
will acquire all remaining shares through a second-step merger.


Indication: AZASITE® (azithromycin ophthalmic
solution) 1% is indicated for the treatment of bacterial conjunctivitis
in patients one year and older caused by the following organisms: CDC
coryneform group G*, Haemophilus influenzae, Staphylococcus
, Streptococcus mitis group, and Streptococcus

Important Selected Safety Information: AZASITE should not be
administered systemically, injected subconjunctivally, or introduced
directly into the anterior chamber of the eye. In patients receiving
systemically administered azithromycin, serious allergic reactions,
including angioedema, anaphylaxis, Stevens Johnson Syndrome and toxic
epidermal necrolysis have been reported rarely. Although rare,
fatalities have been reported.

As with other anti-infectives, prolonged use may result in overgrowth of
non-susceptible organisms, including fungi. If super-infection occurs,
discontinue use and institute alternative therapy. Patients should not
wear contact lenses if they have signs or symptoms of bacterial

Azithromycin should be used during pregnancy only if clearly needed.

The most frequently reported ocular adverse event reported in clinical
trials was eye irritation which occurred in 1-2 percent of patients.
Other adverse events reported in <1 percent of patients included: ocular
reactions (blurred vision, burning, stinging and irritation upon
instillation, contact dermatitis, corneal erosion, dry eye, eye pain,
itching, ocular discharge, punctate keratitis, visual acuity reduction)
and non-ocular reactions (dysgeusia, facial swelling, hives, nasal
congestion, periocular swelling, rash, sinusitis, urticaria).

*Efficacy for this organism was studied in fewer than 10 infections.

About Inspire

Inspire is a specialty pharmaceutical company focused on developing and
commercializing ophthalmic products. Inspire’s specialty eye care sales
force generates revenue from the promotion of AZASITE®
(azithromycin ophthalmic solution) 1% for bacterial conjunctivitis.
Inspire receives royalties based on net sales of RESTASIS® (cyclosporine
ophthalmic emulsion) 0.05% and DIQUAS Ophthalmic Solution 3%
(diquafosol tetrasodium) in Japan. For more information, visit

About Merck

Today’s Merck is a global healthcare leader working to help the world be
well. Merck is known as MSD outside the United States and Canada.
Through our prescription medicines, vaccines, biologic therapies, and
consumer care and animal health products, we work with customers and
operate in more than 140 countries to deliver innovative health
solutions. We also demonstrate our commitment to increasing access to
healthcare through far-reaching policies, programs and partnerships. For
more information, visit

Inspire Forward-Looking Statement

This news release includes “forward-looking statements” within the
meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. The forward-looking statements
in this news release relating to management’s expectations and beliefs
are based on preliminary information and management assumptions.
Specifically, no assurances can be made that the holders of at least a
majority of the outstanding shares of Inspire’s common stock will tender
their shares pursuant to the tender offer or that the other conditions
of the tender offer will be met. Furthermore, no assurances can be made
with respect to the strength of Inspire’s integrated platform growing
the AZASITE product opportunity.

Such forward-looking statements are subject to a wide range of risks and
uncertainties that could cause results to differ in material respects,
including those relating to product development, revenue, expense and
earnings expectations, the introduction of a generic form of epinastine,
intellectual property rights, competitive products, results and timing
of clinical trials, success of marketing efforts, the need for
additional research and testing, delays in manufacturing, funding, and
the timing and content of decisions made by regulatory authorities,
including the U.S. Food and Drug Administration. Further information
regarding factors that could affect Inspire’s results is included in
Inspire’s filings with the SEC. Inspire undertakes no obligation to
publicly release the results of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the
date hereof.

Merck Forward Looking Statement

This news release includes “forward-looking statements” within the
meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. Such statements may include,
but are not limited to, statements about the benefits of the merger
between Merck and Schering-Plough, including future financial and
operating results, the combined company’s plans, objectives,
expectations and intentions and other statements that are not historical
facts. Such statements are based upon the current beliefs and
expectations of Merck’s management and are subject to significant risks
and uncertainties. Actual results may differ from those set forth in the
forward-looking statements.

The following factors, among others, could cause actual results to
differ from those set forth in the forward-looking statements: the
possibility that the expected synergies from the merger of Merck and
Schering-Plough will not be realized, or will not be realized within the
expected time period; the impact of pharmaceutical industry regulation
and health care legislation; the risk that the businesses will not be
integrated successfully; disruption from the merger making it more
difficult to maintain business and operational relationships; Merck’s
ability to accurately predict future market conditions; dependence on
the effectiveness of Merck’s patents and other protections for
innovative products; the risk of new and changing regulation and health
policies in the United States and internationally and the exposure to
litigation and/or regulatory actions.

Merck undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise. Additional factors that could cause results to differ
materially from those described in the forward-looking statements can be
found in Merck’s 2010 Annual Report on Form 10-K and the company’s other
filings with the Securities and Exchange Commission (SEC) available at
the SEC’s Internet site (

Important Information about the Tender Offer

The description contained in this press release is neither an offer to
purchase nor a solicitation of an offer to sell securities. The planned
tender offer described in this press release has not commenced. At the
time the planned tender offer is commenced, a tender offer statement on
Schedule TO will be filed by Merck with the SEC, and Inspire will file a
solicitation/recommendation statement on Schedule 14D-9, with respect to
the planned tender offer. The tender offer statement (including an offer
to purchase, a related letter of transmittal and other tender offer
documents) and the solicitation/recommendation statement will contain
important information that should be re ad carefully before making any
decision to tender securities in the planned tender offer. Those
materials will be made available to Inspire’s stockholders at no expense
to them. In addition, all of those materials (and all other tender offer
documents filed with the SEC) will be made available at no charge on the
SEC’s website at

SAFLUTAN® is a registered trademark of
Merck, Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc.

All other brands are trademarks of their respective owners and are
not trademarks of Merck & Co., Inc., Whitehouse Station, N.J., USA

Photos/Multimedia Gallery Available:

Ian McConnell
Carol Ferguson or Joe Romanelli
Inspire Pharmaceuticals, Inc.
Cara Amoroso
Jenny Kobin

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