Eton Pharmaceuticals, Inc. (Nasdaq: ETON), an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases, today declared that it had agreed to sell its hospital goods to Dr. Reddy’s Laboratories SA, a division of Dr. Reddy’s Laboratories, Ltd. (collectively, “Dr. Reddy’s”) (NYSE: RDY), for a maximum payment of $50 million.
Sean Brynjelsen, CEO of Eton Pharmaceuticals said “The sale of our hospital products allows us to focus our resources on our core rare disease business, which is rapidly growing, and also provides an attractive opportunity to monetize the value we have created with our hospital products. The proceeds from the transaction put us in an even stronger financial position and provide significant capital to further invest in additional rare disease products.”
Terms of Transaction
Dr. Reddy acquired the Biorphen®, Rezipres®, and Cysteine Hydrochloride products under the conditions of the deal. Eton’s rights and interests in the goods will be instantly transferred to Dr. Reddy’s. Till the end of 2022, Eton will keep selling its stock of Biorphen ampules. Eton received approximately $5 million at closing, and will receive additional payments of up to $45 million, based on the achievement of certain event-based and sales-based milestones:
- $20.0 million upon launch of Cysteine hydrochloride injection, assuming a successful court outcome relating to ongoing litigation and commercial launch within six years from the transaction closing.1
- $5.0 million if no competing Cysteine injection products are marketed other than the innovator product (Elcys®) on the six-month anniversary of Dr. Reddy’s Cysteine product launch.1
- $1.0 million upon FDA approval of Biorphen vial, provided it occurs before January 1, 2023. If it occurs after January 1, 202,3 but before March 1, 2023, Eton receives $0.5 million.
- $2.5 million upon FDA approval of the Biorphen bag, provided it occurs before July 1, 2023.
- $1.5 million upon FDA approval of Rezipres vial, provided it occurs before January 1, 2023. If it occurs after January 1, 202,3 but before March 1, 2023, Eton receives $0.75 million.
- $15.0 million of total commercial milestones when combined net sales of all Biorphen products exceed certain revenue targets ranging from $15 to $40 million in twelve months.
Future Plans for Eton
After the deal, Eton’s commercial activities will only be concentrated on rare illness treatments, with a portfolio of four product candidates, of which two are already commercially available, FDA-approved products.
- ALKINDI SPRINKLE®
- Carglumic Acid tablets
- Dehydrated alcohol injection: Product candidate for methanol poisoning that has been submitted to the FDA and has received orphan drug designation.
- ZENEO® hydrocortisone autoinjector: Product candidate under development for the potential treatment of adrenal crisis, which is expected to be submitted to the FDA in 2023.
Featured Image: DepositPhotos © alexraths
