Avadel Pharmaceuticals has announced that Cerecor will acquire the Avadel pediatric portfolio. In connection with this transaction, Avadel and Cerecor will enter into a license and development agreement pursuant to which Avadel will develop up to four product formulations for Cerecor using Avadel’s LiquiTime and Micropump technologies. Under the asset purchase agreement, Cerecor will acquire the company’s four commercial pediatric products, Karbinal ER, Cefaclor for Oral Suspension, Flexichamber and AcipHex Sprinkle, and Cerecor will assume Avadel’s remaining payment obligations to Deerfield CSF, including a $15 million note due in 2021 and its related interest payments, as well as a 15% annual royalty on net sales of the four pediatric products. The company expects the deal to be accretive to EPS in 2018.
“We made significant progress developing our pediatric business over the last two years. The script growth and revenue numbers were up substantially in 2017, particularly for Karbinal ER. However, after strategically evaluating our business objectives, we have made the decision to focus our efforts on expanding our urology, sleep and hospital based products. Our pediatric products align with Cerecor’s objective to become a leading U.S. pediatric pharmaceutical company and with the addition of our sales team will expand their commercial footprint,” Mike Anderson, Avadel’s Chief Executive Officer said.
Under the development agreement, Avadel expects to complete the initial bioequivalence studies within 18 months. Cerecor will reimburse Avadel for any costs associated with the development of the four products in excess of $1 million and, upon transfer of the product formulations, will assume all remaining development costs and responsibilities associated with regulatory approval and marketing. If any products receive approval, Cerecor will pay Avadel quarterly royalties based on a percentage of net sales in the mid-single digits.
Avadel expects the transaction to close before February 28, 2018, subject to the satisfaction of certain closing conditions including the delivery of certain third-party guarantees and consents.