Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Allergan seems to be trying to revive biotech single-handedly.

Less than a week after announcing a deal at a 159 percent premium for dermatology drugmaker Vitae, Allergan revealed on Tuesday it is paying an even bigger mark-up for Tobira Therapeutics and its drug candidate for non-alcoholic steatohepatitis (NASH), a liver disease.

Allergan is paying $533 million up-front, a nearly 500 percent premium on Tobira's closing price Monday -- biopharma's biggest announced premium on record, according to Bloomberg data. And it will pay up to $49.84 per share on top of that if Tobira's drugs hit certain clinical and regulatory milestones.

It's a Record!
Allergan's up-front payment for Tobira represents the biggest premium ever paid in biopharma, according to Bloomberg data. And that does not include the more than $1 billion in extra payments due if Tobira's drugs succeed
Source: Bloomberg
* to target's 20 day average prior to the deal announcement Chart includes only deals worth more than $100 million.

Those are staggering numbers. Even without the premium, this would be a big gamble for Allergan. But the company has cash to spare after selling its generics business to Teva for $40.5 billion. It's getting a promising drug candidate in what could be a huge market, and it's limiting its downside by locking up the majority of the deal's potential value in milestone-based payments. 

Regardless of the outcome, many biotech bargain hunters are likely cursing Allergan CEO Brent Saunders for his expectation-raising aggressiveness, while high-upside biotech targets toast his name. 

Premium Blend
Allergan shocked the biotech world by paying a nearly 500% premium, plus generous potential milestone payments, for liver disease drugmaker Tobira, shares of which soared
Source: Bloomberg
Intraday times are displayed in ET.

The move continues Allergan's shift away from a specialty pharma model, focused on established medicines, toward riskier and more R&D-intensive projects. In pursuit of that transformation and outsize growth, you can see why Allergan might be interested in this drug and this space. Sales of NASH treatments may be worth as much as $35 billion at their peak, according to analysts.

Tobira's promise has eroded in the eyes of the market since a Phase 2 study of its lead NASH drug missed its primary goal this summer. But the drug did improve liver scarring, which seems to have impressed Allergan. More data from that trial will be released next year, and Tobira had planned to start a Phase 3 trial aimed at getting the drug approved next year. Tobira also has another, earlier-stage drug that could eventually be used in combination with Tobira's lead NASH treatment.

The drug also has plenty of competition. Intercept had its drug Ocaliva approved in a different liver condition in May and is recruiting patients for trials in NASH. Biotech giant Gilead has a history of success in liver disease and is testing four different drug candidates in NASH. 

The NASH race will take years to run, and it will take that long to see if Allergan's deal will prove prescient or profligate.

Still, the Nasdaq Biotech Index is up 1.6 percent on the deal, cutting losses for the year to about 12.5 percent; the group was down as much as 29 percent in late June. Against that backdrop, only 37 biotech deals worth $100 million or more have been completed this year, down from 102 at this point last year. Allergan's eye-popping deal is a welcome reminder to investors that just about anything is still possible in this sector.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Max Nisen in New York at

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Mark Gongloff at