Cornerstone Therapeutics (NASDAQ:CRTX) has reached a preliminary agreement to acquire acute-care hospital products company EKR Therapeutics and the rights to two of its drugs in a deal valued at up to $150 million.
Under the definitive agreement, Cornerstone would pay $125 million in cash up front. The Cary, North Carolina pharmaceutical company could pay up to $25 million more if heart attack drug Retavase hits sales milestones over three years. In addition to Retavase, Cornerstone also gets Cardene I.V., a product that comes in a premixed intravenous bag for quick treatment of hypertension when it’s not easy or possible to adminster medication by pill.
Cornerstone announced the EKR deal Monday night. Cornerstone is scheduled to release and discuss first quarter financial results later this morning and the company said it will provide additional details on that conference call.
The EKR acquisition is Cornerstone’s latest move into hospital-based products. Cornerstone last year said it was shifting course toward more products that are used in hospitals, products that could be sold alongside the company’s top seller Curosurf, a treatment for respiratory distress in infants. At the end of 2011, Cornerstone acquired cardiovascular drug company Cardiokine, a deal made add to its portfolio the Cariokine hyponatremia drug candidate now called CRTX 080. During a March conference call to discuss fourth quarter and full-year 2011 financial results, Cornerstone CEO Craig Collard said that the company had $74 million in cash and another acquisition could be coming “very soon.”
Privately-held EKR, based in Bedminster, New Jersey, generated about $58 million in 2011 revenue, mostly from sales of Cardene I.V. But Cornerstone has high hopes for Retavase. The company said in a statement that the company expects U.S. Food and Drug Administration approval of a new active ingredient supplier and a relaunch of the product in 2013, “which could increase revenues significantly versus 2012.”
“This transaction brings Cornerstone critical mass in the hospital-based therapeutics area and represents a major step forward in our strategy to focus on the hospital channel,” Collard said in a statement. “With a significantly expanded product portfolio and larger sales and additional account management infrastructure, we believe we have enhanced our platform to drive future growth.”
Collard added that the company plans to pursue additional hospital product licensing deals. Cornerstone said it expects the EKR deal to close in June. The EKR Board of Directors has approved the merger agreement and recommended its adoption by EKR’s stockholders.
Cornerstone has secured financing for the deal from its majority shareholder, Italian pharmaceutical company Chiesi Farmaceutici. The debt financing commitment provides Cornerstone a five-year loan of up to $60 million at 7.5 percent interest and a five year loan of up to $30 million at 6.5 percent interest.