Abraxis is making an investment of $7 million and will pay milestones and revenues related to services provided.
Abraxis BioScience and ProMetic Life Sciences are allying to develop four drugs based on ProMetic’s protein technologies. Abraxis will make an initial $7 million investment with the possibility to increase investments to up to $32 million in total.
The worldwide agreement, which excludes China and Taiwan, has market opportunities of over $600 million in annual revenue for Abraxis, the company notes. ProMetics could make over $321 million through this collaboration, though a bulk of that money will come post commercialization.
“The cash-flow contribution from these agreements is expected to be in the range of $10 million in 2008 and each of the following two to three years prior to the first expected regulatory approval of the products,” according to Bruce Pritchard, ProMetic’s CFO. “Once the licensed products reach commercial status, the nature of our revenue converts into manufacturing revenues, royalties, and sales milestones, all of which grow proportionately with Abraxis’ sales performance.”
Abraxis will fund all development costs to regulatory approval, paying ProMetic up to $8 million as the compounds advance in the clinic. Under a separate service agreement, ProMetic will perform product-development activities in exchange for about $26 million in revenues over three years.
ProMetic will supply bulk active ingredients for the licensed products, earning additional revenues, which will increase with commercial supply. Abraxis will then perform the final formulation steps to dosage form.
Abraxis will handle commercialization and has agreed to sales-based milestones exceeding $287 million. ProMetic will obtain royalties on the net sales. The first product is expected to reach commercial stage by 2011.
“This transaction signifies the beginning of a new chapter for ProMetic,” says Pierre Laurin, president and CEO of ProMetic. “The equity component and the service agreement, in combination with ProMetic’s other developing revenue streams will fund the day-to-day operations of the company. Financing activities will only be undertaken if significant opportunities emerge to further expand ProMetic’s business.”
