Ipsen plans to spend about $421 million in the near term on acquisitions that will intensify its presence in North America. The firm will take over Tercica, gaining drug candidates in the endocrinology field, Vernalis’ U.S. operations for products against neuromuscular disorders, and certain hematology assets of Octagen.
Under a definitive merger agreement, Ipsen is shelling out $404 million in cash for all the publicly held Tercica shares that Ipsen does not already own. This works out to $9.0 per share, more than double Tercica’s closing price yesterday of $4.41.
The transaction will take effect through an Ipsen subsidiary. The firm will gain the remaining approximately 44.9 million fully diluted shares of Tercica. Ipsen and its subsidiaries currently own approximately 25.3% of the company.
In connection with the agreement, Ipsen reports that it will exercise its warrants to purchase Tercica common stock for a total exercise price of $37 million and to convert all of its outstanding convertible notes into Tercica common stock. Ipsen will then own approximately 42.7% of Tercica's common stock.
Ipsen says that it will also pay up to $12.58 million, for Vernalis’ U.S. subsidiary, Vernalis Pharmaceuticals, and U.S. rights to Apokyn®, a treatment for off episodes in moderate-to-severe Parkinson's Disease. Ipsen will pay $6.52 million upfront and milestone fees of up to $4.97 million based on commercial and operating achievements.
To show its commitment to the business, Ipsen also plans to underwrite before closing $2.2 million of specific corporate and commercial expenses. Ipsen will also subscribe to the equivalent of $5.0 million of newly issued shares of Vernalis.
Additionally, both companies will work together to develop specific Ipsen neurology R&D programs. The firms will negotiate a joint venture to raise funding to support these projects. If this does not proceed, Ipsen will make a payment of $1 million to Vernalis.
The U.S. subsidiary purchase gives Ipsen a neurology-focused commercial team, which already markets Apokyn in the U.S. to neurology specialty physicians. The company believes this will aid in the launch of Dysport for cervical dystonia, which has been accepted for filing by the FDA.
Finally, Ipsen will initially pay Octagen $10.5 million for all OBI-1 related assets. OBI-1 is a biopharmaceutical being developed to treat hemophilia. Ipsen already has worldwide, exclusive rights to this product, but today’s transaction will give it full control of development and commercialization.
Ipsen will make future milestone payments potentially totaling up to $26.0 million. These are contingent on the candidate entering Phase III trials and receipt of marketing approvals in the U.S. and Europe. Octagen will also receive low-to-mid single-digit royalty on net sales in each country on an upward sliding scale depending on certain sales thresholds and after the drug has been on the market for a specified period.
Following the completion of the acquisition of all of the assets related to OBI-1, Ipsen will also redeem its stake in Octagen.