Paladin Labs has negotiated an exclusive licence to U.K. firm ProStrakan’s products for certain emerging territories. Under the terms of the deal, Canada-based Paladin has been assigned ProStrakan’s existing £50 million (about $79 million) debt facility with conversion rights.
The loan will be provided by Paladin at a 10.5% interest rate. Amendments to the transferred debt facility mean Paladin will have the option to convert the outstanding principal debt into new ProStrakan shares at any point after the initial six months of the life of the amended agreement. The strike price for the conversion will be £1.10 (about $1.70) per share, representing a 24% premium on the closing price of ProStrakan’s shares on December 14. Full conversion would provide Paladin with an approximately 18.3% stake in ProStrakan.
Paladin already has Canadian distribution rights to ProStrakan’s EU-marketed sublingual fentanyl drug, Abstral, for managing breakthrough cancer pain and the U.S.-marketed transdermal granisetron patch, Sancuso, for managing chemotherapy-induced nausea and vomiting. The new agreement provides Paladin with distribution rights to all ProStrakan products in specific territories for which the latter doesn’t already have distribution agreements in place. The regions covered include Canada, Latin America, sub-Saharan Africa, and Israel.
Over the course of the debt facility term, Paladin will also have the right to license, in the same territories, any new products acquired or licensed by ProStrakan. “We have, in Paladin, a capable and proven licensing partner for the emerging markets, which will allow us to extract value from markets where we currently are not active,” comments Peter Allen, ProStrakan chairman and acting CEO.
ProStrakan has previously confirmed it is evaluating the potential to sell off the firm, but Paladin should not lose out even if ProStrakan does undergo a change in control. In this event, Paladin will receive a payment equivalent to the balance of interest for the first year of the loan, together with a break fee of £2 million.
2010 has been a somewhat complicated year for ProStrakan, which admits it is also evaluating the potential to sell off the company. In November specialty pharmaceuticals firm Norgine acquired a 12.6% stake in ProStrakan, although the latter pointed out at the time that it had rejected an earlier approach from Norgine on the grounds that it undervalued the company and its prospects. Nevertheless, the ProStrakan board does admit it is evaluating other expressions of interest in the company and its assets.
The firm’s EU-marketed products include Abstral, Rectogesic (ointment for anal fissure pain), Tostran (testosterone gel), and Xomolix (injectable post-operative anti-emetic). Sancuso is the only one of ProStrakan’s products to have achieved U.S. clearance to date, although FDA clearance of Abstral is expected by year-end, and the firm says it is preparing for U.S. launch of the drug during the first quarter of 2011. FDA review of an NDA for Tostran, which will be branded Fortesta in the U.S., is also under way, and a PDUFA date of December 30 has been set. The drug is being developed for the U.S. market by Endo Pharmaceuticals.
ProStrakan achieved total revenues for the first 10 months of 2010 of £76.8 million ($121 million), an increase of 22% at constant currency rates compared with the corresponding period in 2009. Total product revenues increased by 26% (at constant rates) to £74.1 million ($117 million). Abstral achieved sales of £14.1 million ($22.3 million) in the first 10 months of the year, representing growth of 345% over the corresponding period in 2009. In September 2010, the Group launched Abstral in Italy which completes the roll-out of Abstral across the major European markets.
Sancuso recorded sales of £6.7 million ($10.6 million) during the first 10 months of this year, representing 10% growth over the corresponding period in 2009. The drug has been hit by manufacturing issues at Aveva Drug Delivery Systems in Florida, and ProStrakan admits that it does not anticipate restarting distribution of Sancuso until early in the first quarter of 2011.