Date: 2012-02-28
Type of information: Product acquisition
Compound: desmoteplase
Company: Lundbeck (Denmark) Paion (Germany) Bayer (Germany)
Therapeutic area: Cerebrovascular diseases
Type agreement: acquisition
Action mechanism: Desmoteplase is a genetically engineered version of a clot-dissolving protein found in the saliva of the vampire bat Desmodus rotundus.
Disease: acute ischaemic stroke
Details: Paion has sold all of its remaining development, commercial and IP rights as well as know-how to desmoteplase to Lundbeck. The company also announced that Lundbeck enters into PAION's existing agreement with Bayer Pharma AG. In 2005, Paion has granted Lundbeck exclusive worldwide rights outside the USA to develop and market desmoteplase to treat acute ischemic stroke. In 2008, this deal was expanded to provide Lundbeck exclusive, global rights to develop and commercialise Desmoteplase. Paion retained an option to participate in commercialising desmoteplase in German-speaking countries. A clinical Phase III programme with Desmoteplase was initiated by Lundbeck in December 2008, recruiting patients in Europe, North and South America, Africa and Asia Pacific. More than half the patients in the phase III programme have been enrolled in two studies and the first study, DIAS-3, is expected to be completed in the first half 2013. Submission of MAA and NDA are expected in first half 2014. In parallel Lundbeck also focuses on the development of the compound for the Japanese market, for which Lundbeck initiated a Phase II study (DIAS-J) in March 2010.
In 2010, Paion expanded the agreement further and granted Lundbeck research rights and access to potential desmoteplase follow-on compounds that were identified by Paion as well as patent maintenance rights.
Paion will use the proceeds from the sale of desmoteplase to continue to expand in the field of anaesthesia. The company's focus is now on out-licensing Remimazolam and to position itself as a specialist player in the area of anaesthesia and critical care. The near-term goal remains to conclude a partnering agreement for Remimazolam supporting its new strategy.
Financial terms: The purchase price amounts to €20.1 million. As a result, further obligations of Lundbeck towards PAION, as defined in the previous desmoteplase licence agreement, such as milestone payments and royalties, will lapse as well as all milestone and royalty obligations towards Bayer.
An amount of € 16.5 million is due at closing which is expected to occur later today; € 2.1 million of the remaining amount are due after further data and know-how transfer have been completed, which is expected a short period after the closing. € 1.5 million will be placed in escrow for 12 months and is payable thereafter.
Following the completion of the transaction announced today Paion will have approximately €22.5 million in cash and cash equivalents. This transaction ensures sufficient funding of corporate activities into 2014. This does not include further revenues from existing and future licence agreements. Paion's partnering flexibility for Remimazolam is strengthened significantly by the improved cash position.
Latest news: * On December 17, 2014, Lundbeck announced that following the evaluation of the entire available data package including results from DIAS-4 on the investigational compound desmoteplase, Lundbeck has decided to cease further development in ischaemic stroke. Alternatives including divestiture are now being evaluated. In both the DIAS-3 and DIAS-4 study patient sub-groups experienced positive effects and the studies confirmed the favourable safety profile of desmoteplase by indicating good safety and tolerability data. It was, however, insufficiently clear how to select patients in future prospective studies. It has therefore been decided to discontinue the development project in Lundbeck. * On April 17, 2012, Paion announced that Lundbeck has paid €2.1 million of the total amound of € 20.1 million after the full completion of the data and know-how transfer related to desmoteplase. So far € 18.6 million of total € 20.1 million received. This leaves €1.5 million which will be held in escrow for twelve months and is payable thereafter. In connection with the sale of Desmoteplase and the started strategic realignment as a specialized provider of anaesthesia products the Supervisory Board of PAION AG extended the expiring contracts with the current management board members Dr Mariola and Dr Wolfgang Söhngen. The remuneration of the base salary was reset to 100% due to the improved financial situation of the company. Hence the founders will accompany the phase of the extension of the business model.
Following this decision a write-down of DKK 309 million will be taken in the fourth quarter of 2014 and recognized in the R&D costs as communicated earlier this year. For the fiscal year 2014, Lundbeck is still expecting constant currency revenue to be around DKK 13.5 billion. Lundbeck now expects core profit from operations (core EBIT) in constant currency to be in the range DKK 1.1-1.3 billion versus previously DKK 0.9-1.4 billion for 2014. Expected reported profit from operations (EBIT) in constant currency is now expected at DKK 0-0.2 billion compared to previously at DKK 0-0.5 billion for 2014.
* On March 6, 2013, Paion has announced that it has received the final payment of €1.5 million from Lundbeck related to the February 2012 sale of Desmoteplase rights.
