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Aura Of Light Shines On Pernix Shares Following Treximet Acquisition

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Pernix Therapeutics (NASDAQ: PTX) on Wednesday announced that it has signed a contract with GlaxoSmithKline (NYSE: GSK) to acquire the U.S. rights to sell and market the migraine treatment Treximet (sumatriptan/ naproxen sodium).

Details of the Agreement

As part of the agreement, Pernix will pay GlaxoSmithKline $250 million upfront for the rights of Treximet. Glaxo will assign Pernix the Product Development and Commercialization (PDC) Agreement between Glaxo and POZEN (NASDAQ: POZN). Pernix will work with POZEN to amend the PDC Agreement to facilitate further development of the drug.

According to POZEN's press release, “Pernix has also granted POZEN a warrant to purchase 500,000 shares of Pernix common stock at an exercise price equal to the closing market price on May 13, 2014. The warrants, which will be registered by Pernix with the Securities and Exchange Commission, will be exercisable from the closing date of the Divestiture until February 28, 2018.”

GlaxoSmithKline will sell existing inventory to Pernix and will continue to manufacture Treximet in the near future under a Supply Agreement with Pernix. Pernix will continue to make royalty payments on the net sales of the migraine drug.

“The amended Agreement provides for a guaranteed quarterly minimum royalty amount of $4 million for the calendar quarters commencing on January 1, 2015 and ending on March 31, 2018.

In November 2011, POZEN entered into a Purchase and Sale Agreement with CPPIB Credit Investments Inc. (CII), pursuant to which it sold its right to receive future royalty payments arising from U.S. sales of MT 400, including Treximet to CII.

Under the Purchase and Sale Agreement, POZEN will receive a twenty percent (20%) interest in any royalties received by CII relating to the period commencing on April 1, 2018.”

The transaction to close and transfer Treximet is expected to close no later than August 1, 2014.

Benefits for Pernix

Pernix Therapeutics Chairman, President and CEO Doug Drysdale wrote, “The acquisition of Treximet® further accelerates the transformation of Pernix into a specialty pharmaceutical company and expands our portfolio of CNS brands, Silenor® and KhedezlaTM. With the strong presence Pernix is establishing in the adjacent psychiatric market, this acquisition provides Pernix an opportunity to expand the company's reach and penetration into the very important neurology space.”
Pernix expects immediate revenue and transaction benefits from the acquisition of the rights to the migraine drug.

Treximet saw $78.7 million in Full Year net sales in 2013. Pernix expects to nearly double revenues and provided EBITDA margins of more than 30 percent on a pro forma basis for FY2014. The company additionally expects FY2015 total company revenue to exceed $230 million with EBITDA margin of over 40 percent.

Conference Calls

Pernix will host a conference call on Wednesday at 10:00 a.m. EDT to discuss the acquisition. Investors and the general public can access a live webcast of the call and slides from the presentation at www.pernixtx.com.

To participate in the call live, dial (877) 312-8783 (domestic) or (408) 940-3874 (international), and provide conference ID code 47132477.
POZEN will host a webcast at 11:00 a.m (ET). Individuals can access the webcast live and available for replay at www.pozen.com.

Stock Action

Shares of POZEN closed at $8.64 on Tuesday and are currently up 1.27 percent at $8.75.

Pernix has seen an incredible upside to its stock. Shares are currently up over 28 percent at $5.52 following the announcement of the agreement.

Posted-In: TreximetNews Financing Offerings Asset Sales Legal Management

 

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