Abbott sees potential marketing synergies between the triglyceride-lowering agent TriCor (fenofibrate) and Knoll's obesity agent Meridia (sibutramine).

"There is significant sales synergy with Meridia and TriCor," Abbott Exec VP and CSO Jeffrey Leiden, MD/PhD, told analysts during a Dec. 15 conference call announcing the Knoll purchase.

Abbott's acquisition of BASF's brandname drug business "considerably solidifies our position in this area and is the next building block in growing our metabolic disease franchise," Leiden maintained.

Meridia and TriCor are both positioned for use by diabetics, Senior VP-Pharmaceutical Operations Arthur Higgins explained. "Obesity, diabetes and hyperlipidemia" are a "single syndrome of metabolic disease," Leiden commented.

Both brands could use a stimulus in the market. Moving annualized sales of TriCor were $149.1 mil. through October, according to IMS Health data. Sales of Meridia in the U.S. were $91.8 mil. through the first nine months of 1999 and worldwide sales are expected to total $150 mil. in 2000.

Knoll has brought Meridia along cautiously in the market, presumably in response to the fast rise and fall of Redux in the appetite suppressant category. Abbott could help expand use of the product with more marketing support, Higgins suggested. Meridia "will benefit from the superior infrastructure and marketing expertise that Abbott can bring," he declared.

The top brand from Knoll is also in the metabolic category, the thyroid hormone Synthroid. Worldwide sales for the product are estimated at $400 mil. in 2000.

Abbott will take over Synthroid near the end of its market exclusivity. FDA has set an Aug. 14, 2001 deadline for the submission of NDAs for thyroid hormone therapies. Watson's Unithroid is the first levothyroxine product with an NDA; Knoll is in discussions with FDA.

Abbott believes Synthroid can remain a substantial business. Physicians have a "very high brand loyalty to this product," Abbott noted, maintaining that 40% of all scripts are "dispensed as written." Knoll's line of pain products also provide another potential area for synergies, Higgins pointed out. Abbott already promotes Knoll's Vicoprofen to hospitals.

Abbott's goal in the Knoll purchase appears to be similar to the failed Alza deal. The Abbott management team is undertaking a relatively small purchase, but one with existing products to add to the Abbott sales force and several pipeline potentials.

The deal underscores Abbott's senior management interest in pharmaceuticals as a key component of the three-part Abbott business portfolio.

The proposed $6.9 bil. cash deal is very similar in size to the Alza deal. This time Abbott is offering cash instead of stock. The market fluctuations between the announcement of the Alza deal and the end of last year helped to undermine that merger.

Knoll will add $2 bil. in annualized sales, pushing Abbott's global drug business to about $7 bil. in 2001, CFO Gary Coughlan said. The acquisition will increase Abbott's R&D budget by almost 50%: combined the two companies spend about $1 bil. on R&D. About 4% of the purchase price will be recovered in synergy savings of $250 mil. by 2003.

Knoll's Worcester, Mass. R&D facility was one attraction to Abbott. The facility's monoclonal antibody research could become the center for drug discovery programs in autoimmunity, cancer and cardiovascular programs.

The anti-TNF monoclonal antibody D2E7 "is one of the jewels in Knoll's crown," Leiden declared. D2E7 is in Phase III for rheumatoid arthritis. An NDA submission is planned for the first or second quarter of 2002 with a late 2003 launch.

Leiden suggested D2E7 may have advantages in dosing and avoidance of immunosuppressives over the current therapies, Wyeth/Immunex' Enbrel and J&J/Centocor's Remicade. D2E7 will be administered either once or twice weekly.

BASF attracted attention to the potential for its drug business by recently promoting the high sales expectations for D2E7. The Abbott deal is expected to close on Feb. 28. BASF will use $3.6 bil. ([Euro]4 bil.) of the proceeds to pay down debt.

Abbott Sees Metabolic Growth In Knoll: Meridia May Mesh With TriCor

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