Cipla Acquisition to help the company build a specialty pipeline in the United States.
Cipla has entered into an agreement to acquire US-based specialty pharma company Avenue Therapeutics Inc for $215 mn or around Rs 15.6 bn. This is in accordance with Cipla’s technique of building a strength drugs pipeline in the US.
Cipla’s US subsidiary InvaGen Pharmaceuticals Inc will make the acquisition in two phases, the organization said. In the principal stage, InvaGen or its other stakeholders will get a 33.3 percent stake in Avenue’s via new shares for around $35 mn (currently expected to be 5,833,333 shares at $6.00 per share).
Upon the completion of the first stage, InvaGen will appoint three members (including one independent) on Avenue’s Board of directors which currently comprises seven members. In the second stage, InvaGen will acquire the remaining shares of Avenue’s common stock for up to $180 mn. Cipla said that this is currently expected to represent around $13.92 per share.
Shares of the Nasdaq listed company (Avenue) closed at $4.16 a share on Monday. Cipla has been a late entrant in the US market. It is now planning to build its complex formulations pipeline in the US.
Avenue Company is doing lots of research and development at the improvement and commercialisation of intravenous Tramadol, a pain relieving to treat pain in adults. There is presently no endorsed intravenous definition in the US. Avenue is assessing IV Tramadol in Phase 3 clinical program: a preliminary in patients following bunionectomy medical procedure has been finished and a safety study is progressing. An essential Phase 3 preliminary in patients following abdominoplasty medical procedure is required to initiate in the not so distant future in 2018.
Speaking on the acquisition, Umang Vohra, Managing Director & Global Chief Executive Officer, Cipla, said: “Our investment in and proposed acquisition of Avenue establishes our presence in the specialty institutional business in the US. The novel intravenous drug delivery method of Tramadol addresses extremely crucial and hitherto unmet needs in pain management. This investment is in keeping with our stated intention to build a specialty pipeline in the US market.”
Lucy Lu, M.D., President & Chief Executive Officer, Avenue, said: “We are very pleased to partner with InvaGen to accelerate the Phase 3 clinical development and potential commercialisation of IV Tramadol in the United States. We believe that this transaction creates significant value for our shareholders and creates a path to maximise their return on investment.”
Torreya Capital LLC is acting as exclusive financial advisor to Avenue. Oppenheimer & Co, Inc. provided a fairness opinion on the transaction to Avenue’s Board of Directors. Alston & Bird LLP and Richards, Layton & Finger, P.A. served as legal counsel to Avenue, and Hughes Hubbard & Reed LLP served as legal counsel to Cipla.