Fail-safe product and deal
Option agreement between Cadence Pharmaceuticals and Incline Therapeutics gives Cadence two option periods to acquire Incline
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SAN DIEGO—Cadence Pharmaceuticals Inc., a biopharmaceutical company focused on in-licensing, developing and commercializing proprietary product candidates, principally for use in the hospital setting, has signed an agreement that provides Cadence with an exclusive option to acquire Incline Therapeutics Inc., a privately held specialty pharmaceutical company.
Under the terms of the option agreement, Cadence will pay Incline a $3.5 million upfront option fee and a second $3.5 million fee upon the commencement of the second option period if the first option wasn't exercised. The second option period commences on the later to occur of 12 months or the date on which Incline receives the second tranche of its Series A financing and extends until the earlier to occur of 42 months or the date on which Incline submits a supplemental New Drug Application (NDA) for its fentanyl iontophoretic transdermal system, IONSYS, to the U.S. Food and Drug Administration (FDA), subject to certain limitations.
Cadence may exercise its option to acquire Incline at any time during the first option period for an amount not to exceed $135 million, and at any time during the second option period for an amount not to exceed $228 million, plus payment of an additional amount not to exceed $57 million upon FDA approval of IONSYS. Cadence simultaneously announced that it closed a $30 million secured loan facility with Oxford Finance Corp., Silicon Valley Bank and GE Financial Services Inc.
Incline is developing IONSYS to provide patient-controlled analgesia for adult inpatients requiring opioids following surgery. IONSYS is a compact, needle-free, self-contained, pre-programmed system designed to be applied to the skin on the upper arm or chest and activated by patients double-clicking a button on the system. A generally imperceptible electrical current then actively delivers a small dose of the short-acting opioid directly through the skin and into the systemic circulation.
The product was approved by both the FDA and the European Medicines Agency (EMA) in 2006, but subsequently, the regulatory bodies required additional patient safety features to be developed for the system. Bill LaRue, senior vice president and CFO at Cadence, notes that a corrosion problem was affecting the drug delivery mechanism causing inadvertent dosing, which led the FDA and EMA to suspend approval of the product in 2008.
LaRue notes that Cadence's focus on hospital therapeutics is consistent with the interest being shown by investors in the market.
"The hospital market is underserved—even ignored—by large pharma," he says.
With about 1,800 hospitals representing 80 percent of the market, it can be served by a modest-size sales force, he notes, offering a very efficient model for a company Cadence's size.
"We believe this agreement provides Cadence with the opportunity to build our pipeline and strengthen our franchise in the hospital market, while effectively managing our cash," says Ted Schroeder, president and CEO of Cadence. "This transaction is consistent with our long-standing strategy to focus on products for use in the hospital that we believe have a clear clinical and regulatory path to approval. If approved, we believe that IONSYS will represent a potentially significant commercial opportunity and be an excellent strategic fit with our OFIRMEV (acetaminophen) injection product candidate in the post-surgical setting."
On May 4, Cadence resubmitted an NDA for OFIRMEV for the treatment of pain and fever in adults and children. The FDA has assigned a new Prescription Drug User Fee Act (PDUFA) action date for OFIRMEV of Nov. 4.
Incline announced separately that it has entered into an agreement to complete a $43 million Series A venture financing, which will be used primarily to fund the development of IONSYS. Cadence will receive $500,000 of Incline Series A preferred stock, and Schroeder has been appointed as Cadence's representative on Incline's board of directors. Upon closing of the transaction, David Socks, senior vice president of corporate development and strategy, has resigned from Cadence to join Incline as president and chief operating officer.
More than 20 million inpatient surgical procedures requiring pain management are estimated to occur in the United States each year. Current treatment methods include bolus injections, regional nerve blockade, epidural infusions and intravenous patient-controlled analgesia (IV PCA). IV PCA systems are controlled infusion pumps that deliver a prescribed amount of an intravenous opioid when a patient activates a button connected to the pump. Although it is estimated that approximately 50 percent of patients receive IV PCA after surgery, IV PCA has been associated with programming, medication and pump errors, IV line infections, needlestick injuries and limited patient mobility.
Under the terms of the option agreement, Cadence will pay Incline a $3.5 million upfront option fee and a second $3.5 million fee upon the commencement of the second option period if the first option wasn't exercised. The second option period commences on the later to occur of 12 months or the date on which Incline receives the second tranche of its Series A financing and extends until the earlier to occur of 42 months or the date on which Incline submits a supplemental New Drug Application (NDA) for its fentanyl iontophoretic transdermal system, IONSYS, to the U.S. Food and Drug Administration (FDA), subject to certain limitations.
Cadence may exercise its option to acquire Incline at any time during the first option period for an amount not to exceed $135 million, and at any time during the second option period for an amount not to exceed $228 million, plus payment of an additional amount not to exceed $57 million upon FDA approval of IONSYS. Cadence simultaneously announced that it closed a $30 million secured loan facility with Oxford Finance Corp., Silicon Valley Bank and GE Financial Services Inc.
Incline is developing IONSYS to provide patient-controlled analgesia for adult inpatients requiring opioids following surgery. IONSYS is a compact, needle-free, self-contained, pre-programmed system designed to be applied to the skin on the upper arm or chest and activated by patients double-clicking a button on the system. A generally imperceptible electrical current then actively delivers a small dose of the short-acting opioid directly through the skin and into the systemic circulation.
The product was approved by both the FDA and the European Medicines Agency (EMA) in 2006, but subsequently, the regulatory bodies required additional patient safety features to be developed for the system. Bill LaRue, senior vice president and CFO at Cadence, notes that a corrosion problem was affecting the drug delivery mechanism causing inadvertent dosing, which led the FDA and EMA to suspend approval of the product in 2008.
LaRue notes that Cadence's focus on hospital therapeutics is consistent with the interest being shown by investors in the market.
"The hospital market is underserved—even ignored—by large pharma," he says.
With about 1,800 hospitals representing 80 percent of the market, it can be served by a modest-size sales force, he notes, offering a very efficient model for a company Cadence's size.
"We believe this agreement provides Cadence with the opportunity to build our pipeline and strengthen our franchise in the hospital market, while effectively managing our cash," says Ted Schroeder, president and CEO of Cadence. "This transaction is consistent with our long-standing strategy to focus on products for use in the hospital that we believe have a clear clinical and regulatory path to approval. If approved, we believe that IONSYS will represent a potentially significant commercial opportunity and be an excellent strategic fit with our OFIRMEV (acetaminophen) injection product candidate in the post-surgical setting."
On May 4, Cadence resubmitted an NDA for OFIRMEV for the treatment of pain and fever in adults and children. The FDA has assigned a new Prescription Drug User Fee Act (PDUFA) action date for OFIRMEV of Nov. 4.
Incline announced separately that it has entered into an agreement to complete a $43 million Series A venture financing, which will be used primarily to fund the development of IONSYS. Cadence will receive $500,000 of Incline Series A preferred stock, and Schroeder has been appointed as Cadence's representative on Incline's board of directors. Upon closing of the transaction, David Socks, senior vice president of corporate development and strategy, has resigned from Cadence to join Incline as president and chief operating officer.
More than 20 million inpatient surgical procedures requiring pain management are estimated to occur in the United States each year. Current treatment methods include bolus injections, regional nerve blockade, epidural infusions and intravenous patient-controlled analgesia (IV PCA). IV PCA systems are controlled infusion pumps that deliver a prescribed amount of an intravenous opioid when a patient activates a button connected to the pump. Although it is estimated that approximately 50 percent of patients receive IV PCA after surgery, IV PCA has been associated with programming, medication and pump errors, IV line infections, needlestick injuries and limited patient mobility.
