InvaGen Pharmaceuticals, a unit of India-based Cipla, has signed definitive agreements to buy US-based specialty pharmaceutical firm Avenue Therapeutics for a total consideration of $215m.
Avenue Therapeutics, a Fortress Biotech company, is primarily focussed on the development and commercialisation of intravenous (IV) formulation of Tramadol, an analgesic.
IV Tramadol is intended for the treatment of moderate to moderately severe post-operative pain. The formulation is currently being evaluated in a pivotal Phase III clinical programme.
Cipla expects the deal to help establish its footprint in the specialty institutional business in the US.
Cipla managing director and global CEO Umang Vohra said: “Our investment in and proposed acquisition of Avenue establishes our presence in the specialty institutional business in the US.
“The novel intravenous drug delivery method of Tramadol addresses extremely crucial and hitherto unmet needs in pain management.”
The transaction involves two closing stages. In the first stage, InvaGen will acquire shares accounting to a 33.3% stake in Avenue’s capital stock for $35m. The common stock price is estimated to be $6 per share.
Upon closing of the stock issuance, InvaGen will appoint three members on Avenue’s board of directors.
At the second closing stage, InvaGen will buy the remaining Avenue shares for up to $180m in the aggregate, which is estimated to be valued at around $13.92 per share.
Avenue Therapeutics president and CEO Lucy Lu said: “IV Tramadol offers a novel mechanism of action among intravenous analgesics and could be an important new therapy that fills a significant gap in pain management.
“We believe that this transaction creates significant value for our shareholders and creates a path to maximise their return on investment.”
The acquisition is subject to Avenue stockholders’ and regulatory approvals, along with other customary closing conditions.