Deal valued at $215 million initially covers treating excess abdominal fat in HIV patients with lipodystrophy.

EMD Serono will pay Theratechnologies $30 million to commercialize its Phase III treatment for excess abdominal fat in HIV patients with lipodystrophy in the U.S. Theratechnologies could earn another $185 million in milestone fees related to development, regulatory, and sales achievements.

The upfront payment includes a $22 million license fee and an equity investment of $8 million. Merck KGaA, to which EMD Serono is affiliated, will offer $3.67 per share, providing it with a 3.6% ownership. Theratechnologies, which retains all tesamorelin commercialization rights outside of the U.S., will be entitled to royalties from U.S. sales.

Tesamorelin is a growth hormone-releasing factor analogue and is in the final stages of its second Phase III trial. The purpose of the study is to confirm the results of the first Phase III study, concluded in October 2007.

“These milestone and royalty payments provide Theratechnologies with a fully financed business plan through the commercialization of tesamorelin for its first indication in the U.S.,” points out Luc Tanguay, Theratechnologies senior evp  and CFO.

“Theratechnologies will also have the financial flexibility to pursue the development of a second indication and build the long-term value of the compound,” Tanguay continues. Theratechnologies will be responsible for conducting R&D for additional indications. If EMD Serono exercises its option to codevelop and commercialize additional indications for tesamorelin in the U.S., the firm will equally share in related development costs. Theratechnologies, in such case, has the right to opt to copromote such additional indications.

The transaction is expected to close in December.

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