Shares of Avanir Pharmaceuticals (AVNR) popped as much as 12% in pre-market trading today after Otsuka Pharmaceuticals (OTSKF) announced that it will pay $3.5 billion to acquire the company,  $17 per share. The boards of both companies have approved the deal and the official tender offer for all outstanding shares will be out within 10 days and run for 20 days.  When the deal closes, Avanir will maintain its current structure as a subsidiary of Otsuka America.

The deal adds Avanir's products to the Otsuka company pipeline. Avanir already has one FDA approved drug in the u.s. known as Nuedexta which treats a neurological disorder for uncontrollable laughing or crying. 

Avanir Pharmaceuticals has a big pipeline of unique clinical compounds that treat various Central Nervous System — CNS — diseases. Such other clinical compounds being developed in the pipeline include treatments for: Agitation in Alzheimer's Disease, Neuropathic Pain, Major Depressive Disorder, Migraine, Levadopa-Induced Dyskinesia, and many others. Otsuka made another acquisition of another U.S. biotech known as Astex Pharmaceuticals a few years ago for its cancer compound pipeline, for $886 million. 

The acquisition of Avanir could have been prompted by the company's positive results in their Phase 2 Alzheimer's Study. The study known as AVP-923 recruited 220 patients for a 10-week study to determine the efficacy and safety of Avanir's drug compound. The study showed that AVP-923 met its primary endpoint of reduced agitation in Alzheimer disease patients achieving a p-value of (p = 0.00008). Reduced agitation is measured utilizing the aggression/agitation domain score of neuropsychiatric Inventory. The AVP-923 drug fared much better than placebo as seen in the P-value above and Avanir now expects to meet with the FDA and EMA agencies in the coming year to initiate a pivotal Phase 3 study for AVP-923. 

More information about the acquisition can be found in the press release.