Shares in Aeterna Zentaris Inc. (TSX:AEZS) (NASDAQ:AEZS) have shot up 37% today as values rose from $2.08 yesterday closing time to a peak of $2.85 at 9:45 EST this morning. This comes on the heels of a license agreement announced today that potentially could earn hundreds of millions of dollars for the small drug producer, which has a market cap of just $41.2m currently.
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The agreement with Strongbridge Biopharma (NASDAQ:SBPP) sees Aeterna Zentaris developing, commercializing, registering, AND manufacturing the drug Macrilen. The details of the deal are as follows:
- Strongbridge will pay Aeterna an up-front payment of US$24m, in addition to a 15% royalty on all sales up to $75m and an 18% royalty on all sales above that while the drug is patent-protected.
- Once patent-protection ends in the US and Canada, Aeterna will then earn 5% on net sales in those countries.
- Aeterna will receive one-off payments of around 20% when each of these milestone net sales targets are met: $25m, $50m, $100m, $200m, and $500m.
- Just to sweeten the deal, Strongbridge will fund 70% of the costs of a pediatric development program to be run by Aeterna with a joint steering committee.
In short, Aeterna is potentially getting an awful lot of cash thrown its way.
The drug in question, Macrilen (or macimorelin), has received orphan drug designation by the FDA for the evaluation of growth hormone deficiency (GHD), as well as receiving FDA marketing approval on December 20th towards treatment of adult growth hormone deficiency (AGHD). It works by stimulating the secretion of growth hormones.
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CEO of Aeterna Michael Ward said of the deal: “We are very excited to partner with Strongbridge on the commercialization of Macrilen in the US and Canada.
“We look forward to exploring the various alternatives to monetizing our rights to macimorelin outside of the United States and Canada.”
AGHD affects approximately 60,000 adults across the US and Canada. It typically occurs after damage to the pituitary gland, which can be caused by head injury, radiotherapy, or tumors, among other things. The condition is characterised by a decrease in strength and muscle growth, lack of stamina and energy, or increased amounts of fat and cholesterol abnormalities that are linked to heart disease.
Keep a close eye on Aeterna Zentaris stocks in the coming months as development continues and funds begin to flow.
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Featured Image: Depositphotos/© motorolka
