Revised license agreements leave Cephalon responsible for litigation but not milestones and royalties.

Acusphere and Cephalon have amended their license arrangements such that Acusphere is receiving $1 million in lieu of $15 million in milestones and future royalties. Acusphere’s stock took an approximate 20% hit in early morning trading.

With this payment, Acusphere says that it has approximately $2.8 million in unaudited cash. The firm expects this will fund operations up to the fourth quarter.

The March and November 2008 license agreements between the firms covered oncology applications of Acusphere’s Hydrophobic Drug Delivery System and AI-525, an intravenous formulation of celecoxib. The terms of the deals called for milestones payment through senior secured convertible notes.

According to the amended terms, Cephalon will assume primary responsibility for patent prosecution of licensed technology. As a result of this transaction, two other agreements have also been terminated, and Cephalon no longer has a security interest in any of Acusphere’s assets. Also, Cephalon no longer has any rights related to equity ownership in Acusphere nor any product rights to Imagify™, Acusphere’s lead candidate,  an ultrasound contrast agent being developed for the detection of coronary artery disease.

Acusphere is seeking another partner for the continued development of Imagify. In February FDA notified the firm that additional clinical work demonstrating Imagify’s performance relative to noncontrast ultrasound would be required for approval.

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