French pharmaceutical company Ipsen has agreed to acquire Canada-based Clementia Pharmaceuticals for an initial aggregate cash consideration of $1.04bn to boost its rare disease portfolio.

The terms of the agreement also include additional potential payment of $263m on certain milestones.

Clementia Pharmaceuticals focuses on the development of therapies for ultra-rare bone diseases.

Its key programme is a retinoic acid receptor gamma (RARγ) selective agonist called palovarotene for the potential treatment of fibrodysplasia ossificans progressiva (FOP) and multiple osteochondromas (MO), among other diseases.

FOP and MO are rare and severely-disabling bone disorders that currently lack treatments.

Commenting on the deal, Ipsen CEO David Meek said: “The acquisition of Clementia Pharmaceuticals accelerates the ongoing transformation of Ipsen as we are successfully executing on our external innovation strategy to identify and acquire innovative medicines to serve patients with unmet medical needs.

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“Through this transaction, we will gain scientific expertise, exceptional talent, and a cornerstone ultra-rare disease drug candidate with rare paediatric disease and breakthrough therapy designations, potential US approval in 2020 and additional indications to follow.”

“Through this transaction, we will gain scientific expertise, exceptional talent, and a cornerstone ultra-rare disease drug candidate with rare paediatric disease.”

Currently, palovarotene is being studied in a Phase III registration trial for FOP, a Phase II trial for MO and a Phase I study to treat dry eye disease.

Palovarotene’s new drug application (NDA) for episodic flare-up treatment of FOP is expected to be submitted in the US in the second half of this year; initial commercial launch is planned for next year.

The drug holds orphan drug designation for FOP and MO from both the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA).

In addition, the product received fast track, breakthrough therapy and rare paediatric disease designations for FOP from the FDA.

According to the terms of the deal, FDA acceptance of the NDA for MO will trigger a regulatory milestone as contingent value right (CVR) of $6 per share, corresponding to a payment of $263m.

The acquisition has been approved by boards of directors of both the parties. Subject to satisfaction of all closing conditions, the deal will close in the second quarter of this year.