Milestone payments could reach $273.5 million.

BioMarin Pharmaceutical is paying La Jolla Pharmaceutical $15 million upfront for its late-stage lupus nephritis drug. La Jolla, whose stock doubled, could receive $273.5 million in development, registration, and sales milestones.

The initial fee comes in equal portions of cash and equity. Future payments include: $92.5 million related to clinical achievements, $55 million for regulatory success, and up to approximately $126 million for reaching specified annual net sales beginning at $250 million. BioMarin may apply up to $20 million of these preapproval clinical milestones toward additional purchases of La Jolla preferred stock.

Riquent failed to show effectiveness in two earlier late-stage clinical trials.  BioMarin CEO, Jean-Jacques Bienaime, nonetheless feels that the current study addresses the shortcomings of prior evaluations. “The ASPEN Phase III study is the largest clinical study ever conducted in lupus nephritis, and there is increasing evidence that Riquent targets one of the most important underlying causes of kidney disease in lupus patients, antibodies to double-stranded DNA.”

The terms of the deal are structured to counter for further negative data and the resulting financial fallout. There are two scheduled interim efficacy analyses, which are expected to occur in the first quarter of 2009 and mid-2009, respectively. At each of these analyses or at completion of the ASPEN study, BioMarin may exercise its option to fully participate and share all losses and profits on a 50:50 basis. Prior to this, La Jolla will fund 100% of all costs. La Jolla expects consideration from the deal to significantly cover the remaining costs of the Phase III trials.

If the first interim efficacy analysis results in a nonfutile determination, BioMarin will pay $15 million to maintain its license option. If the second interim efficacy analysis also results in a nonfutile determination, BioMarin will pay a milestone of $22.5 million, $5 million of which may be used to purchase additional equity.

The final efficacy analysis is expected to occur in the second half of 2009. An NDA is expected to be submitted in the first half of 2010. La Jolla will maintain primary manufacturing responsibility and work collaboratively with BioMarin to maximize supply chain and process efficiencies.

If approved, the companies will jointly commercialize Riquent in the U.S., while BioMarin will be responsible for global commercialization barring the Asia-Pacific region. Riquent is in a Phase III ASPEN trial evaluating whether it delays the time to renal flare and reduces proteinuria in lupus renal disease.


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