AVANIR Pharmaceuticals Sells Schizophrenia Drug Rights to Irish Firm for $42 Million; CFO to Go
Under terms of the agreement, AVANIR will receive approximately $42 million at the close of the transaction with up to an additional $10 million in contingent payments in 2009. In addition, AVANIR will receive up to $2 million in royalties, based on 3% of annual net product revenues in excess of $17 million. AVANIR’s earn-out obligations that would have been payable to the prior owner of Alamo Pharmaceuticals upon the achievement of certain sales milestones will be assumed by Azur Pharma. AVANIR has agreed to transfer or assign all FazaClo business operations including marketing, sales and medical affairs infrastructure as well as manufacturing agreements to Azur Pharma following the completion of the transaction. The agreement is subject to customary closing conditions and is expected to close by early August 2007.
“The divestiture of FazaClo marks an important step forward in our corporate strategy to direct our resources toward the Zenvia™ development programs,” said Keith Katkin, AVANIR's President and CEO. “This strategic move raises significant capital without shareholder dilution and enhances our current cash position. We will use $11 million of the sales proceeds to pay down a portion of our outstanding notes and believe our remaining net available funds will be sufficient to finance operating expenses for at least the next year, including funding the initiation of both our planned confirmatory Phase III clinical trials of Zenvia in patients with involuntary emotional expression disorder (IEED) and with diabetic peripheral neuropathic (DPN) pain.”
“We have accomplished a great deal since acquiring FazaClo just over a year ago for $29 million plus $4 million in contingent run rate notes. Our commercial team successfully executed on marketing and sales activities that resulted in a significant increase in total prescriptions as well as our prescriber base,” said Gregory Flesher, Executive Director of Business Development. “Despite this growth, the acquisition of FazaClo in May of 2006 was always intended to complement the Zenvia launch and its divestiture will now enable us to further invest in the clinical development of our core asset – Zenvia. We are placing FazaClo into a highly competent organization and patients with schizophrenia will continue to benefit from this important medication.”
In light of the reduced operating infrastructure anticipated following the sale of FazaClo, the Company announced that Mike Puntoriero, Senior Vice President and Chief Financial Officer, will be resigning his position with AVANIR effective July 11, 2007. Martin Sturgeon, AVANIR’s Chief Accounting Officer, who has been with AVANIR since February 2007, will assume the role of Interim Chief Financial Officer. “I would like to thank Mike for his leadership over the past several months and we wish him much success in his future endeavors,” said Mr. Katkin.
About AVANIR
AVANIR Pharmaceuticals is focused on developing, acquiring and commercializing novel therapeutic products for the treatment of chronic diseases. AVANIR’s products and product candidates address therapeutic markets that include the central nervous system, inflammation and infectious diseases. AVANIR's lead product candidate for the treatment of involuntary emotional expression disorder (IEED), Zenvia, is the subject of an approvable letter from the FDA. Additionally, AVANIR recently completed a Phase III clinical trial with Zenvia in patients with diabetic peripheral neuropathic (DPN) pain where all primary endpoints were met. AVANIR has an ongoing development program with Novartis International Pharmaceutical Ltd. for the treatment of inflammatory disease. AVANIR’s infectious disease drug candidate, AVP-21D9, is a human monoclonal antibody in pre-clinical development with funding to date from an NIH/NIAID grant. The Company's first commercialized product, Abreva®, is marketed in North America by GlaxoSmithKline Consumer Healthcare and is the leading over-the-counter product for the treatment of cold sores. Further information about AVANIR can be found at www.avanir.com.
Forward Looking Statements
Statements in this press release that are not historical facts, including statements that are preceded by, followed by, or that include such words as "estimate," "intend," "anticipate," "believe," "plan," "goal," "expect," or similar statements, are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from the future results expressed or implied by such statements. There can be no assurance that the sale of the Company’s FazaClo operations will be completed under the terms of the definitive agreement or in the time periods that are anticipated, or that the proceeds received by the Company in this transaction, together with the Company’s other available funds, will be sufficient to fund the Company’s operations as currently anticipated. Risks and uncertainties affecting the Company’s financial condition and operations also include the risks set forth in AVANIR's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, and from time-to-time in other publicly available information regarding the Company. Copies of this information are available from AVANIR upon request. AVANIR disclaims any intent to update these forward-looking statements.
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Reedland Capital Partners an Institutional Division of Financial West Group served as the financial advisor to AVANIR in the transaction.