Avanir Pharmaceuticals (Nasdaq: AVNR) shares are trading at $2.76 on volume of 4.1 million this morning, up 38 cents from yesterday’s close, following word of the company’s $42 million sale of its anti-psychotic drug, FazaClo. The sale will allow the company to direct funds toward the development of Zenvia, a treatment for emotional expression disorder.Avanir announced today it signed a definitive agreement to sell FazaClo to Azur Pharma, a specialty pharmaceutical company based in Ireland. Per the agreement, Avanir will receive the $42 million at the close of the transaction, with up to an additional $10 million in contingent payments in 2009. Additionally, Avanir may receive up to $2 million in royalties on 3 percent of net product revenues over $17 million.
S “The divestiture of FazaClo marks an important step forward in our corporate strategy to direct our resources toward the Zenvia development programs,” said Keith Katkin, president and CEO of Avanir, in a press release. “This strategic move raises significant capital without shareholder dilution and enhances our current cash position. We will use $11 million of the sales proceeds to pay down a portion of our outstanding notes and believe our remaining net available funds will be sufficient to finance operating expenses for at least the next year, including funding the initiation of both our planned confirmatory Phase III clinical trials of Zenvia in patients with involuntary emotional expression disorder (IEED) and with diabetic peripheral neuropathic (DPN) pain.”
FazaClo is used for patients with severe schizophrenic patients who do not respond to standard treatments for schizophrenia. The drug is also indicated for reducing the risk of recurrent suicidal behavior in patients with schizophrenia or schizoaffective disorder.
Avanir acquired FazaClo over a year ago for an aggregate $33 million. The company said its commercial team significantly increased the total prescriptions and prescriber base within the following year.
“Despite this growth, the acquisition of FazaClo in May of 2006 was always intended to complement the Zenvia launch and its divestiture will now enable us to further invest in the clinical development of our core asset – Zenvia. We are placing FazaClo into a highly competent organization and patients with schizophrenia will continue to benefit from this important medication,” said Gregory Flesher, executive director of Business Development.
According to the press release, Avanir will transfer or assign all FazaClo operations such as marketing, sales and medical infrastructure to Azur Pharma upon completion of the deal.
