Nuvo Research Inc. (TSX: NRI), a pharmaceutical company dedicated to building a portfolio of products primarily for the treatment of pain, today announced that it has entered into an agreement to acquire ZARS Pharma, Inc., a specialty pharmaceutical company based in Salt Lake City, Utah. The transaction is expected to close in the middle of the second quarter of 2011.
Under the terms of the acquisition agreement, Nuvo will issue 101.5 million common shares to the shareholders of ZARS at closing, representing approximately 19.5% of Nuvo's shares after giving effect to the acquisition. In addition, Nuvo will issue a $14.9 million promissory note to the ZARS' shareholders upon the achievement of a milestone related to ZARS' product Pliaglis®, and Nuvo may issue up to an additional $8 million of promissory notes upon the occurrence of certain future events. Nuvo expects the transaction will be neutral to its financial results in 2012 and accretive thereafter.
"Given Nuvo's strategic focus and expertise in the topical treatment of pain, the acquisition of ZARS and its approved products advances our step-by-step approach to building Nuvo into a profitable leader in the topical pain therapeutics space," stated Dan Chicoine, Chairman & Co-Chief Executive Officer of Nuvo. "While our initial focus will be on extracting maximum value from commercialization of Pliaglis and Synera®, ZARS also brings intriguing pipeline programs. We intend to carefully assess these programs while maintaining our conservative approach to research and development, only advancing those programs that complement our existing product portfolio and offer substantial return on investment."
ZARS is a specialty pharmaceutical company focused on the development and commercialization of topically administered drugs, primarily with respect to pain treatment, using its proprietary drug delivery technologies. ZARS product portfolio includes two topical pain products that have received marketing approvals, Pliaglis and Synera. Pliaglis is a topical local anesthetic cream, which uses ZARS proprietary phase-changing topical peel technology and is U.S. Food and Drug Administration (FDA) approved to provide topical local analgesia for superficial dermatological procedures, such as dermal filler injection, pulsed dye laser therapy, facial laser resurfacing, and laser-assisted tattoo removal. ZARS has licensed worldwide marketing rights to Pliaglis to Galderma Pharma S.A., a global specialty pharmaceutical company focused on dermatology. Pliaglis has not been available in the U.S. since 2008 as a result of manufacturing issues. Galderma has since transferred manufacturing to its own facilities. Later this year, ZARS expects Galderma to submit to the FDA the information required for re-launch of Pliaglis in the U.S. ZARS expects to file a European regulatory submission mid-year 2011 that will be the basis for regulatory approval and launch by Galderma in multiple European Union countries.
Synera is a topical patch that combines lidocaine, tetracaine and heat, using ZARS proprietary "Controlled Heat Assisted Drug Delivery" (CHADD) technology. Synera is approved: (i) in the U.S. to provide local dermal analgesia for superficial venous access and superficial dermatological procedures, such as excision, electrodessication, and shave biopsy of skin lesions; and (ii) in Europe, for surface anaesthesia of normal intact skin in connection with needle puncture in adults and children from three years of age, as well as for cases of superficial surgical procedures on normal intact skin in adults. ZARS currently markets Synera in the U.S. and its licensing partner, EuroCept International B.V., has initiated a pan-European launch of Synera (under the name "Rapydan"). Synera/Rapydan has received marketing authorization in Sweden, the UK, Germany, the Netherlands, France, Spain, Austria, the Czech Republic, Greece, Ireland, Norway, Belgium, Denmark, Finland, Hungary, Italy, Luxembourg, Poland and Portugal following the completion of the European Mutual Recognition Procedure. ZARS also has additional programs in various stages of clinical development.
"We are pleased to become part of Nuvo," said ZARS President and CEO Robert Lippert. "We believe that the anticipated near-term cash flow from Pliaglis and Synera complements the growing cash flow from Nuvo's Pennsaid product and that the combination of the two companies will lead to greater value for both companies' shareholders."
At its annual and special meeting of shareholders, scheduled to be held on May 27, 2011, Nuvo will seek the approval of its shareholders to issue Nuvo common shares to the ZARS' shareholders in lieu of the promissory notes that become issuable upon the achievement of the Pliaglis milestone and the occurrence of the future events noted above. Such common shares will be issued at an implied price of $0.20 per share, such that, if the Pliaglis milestone and each of the certain future events occur, the total number of additional common shares to be issued to the shareholders of ZARS will be 114.6 million.
Upon closing, Theodore H. Stanley, M.D. will join the Nuvo board of directors. Dr. Stanley is a co-founder of ZARS and has been non-executive Chairman since its inception. Dr. Stanley is currently Professor of Anesthesiology at the University of Utah. He co-founded Anesta, a drug delivery company that developed two FDA-approved products: Oralet and Actiq. Anesta was acquired by Cephalon, Inc. in 2000. He is internationally known for his developmental work on opioids, other intravenous anesthetics and novel drug delivery techniques. Dr. Stanley is also an executive officer of the National Academy of Perioperative Echocardiography, NeuroAdjuvants, Inc. and the Stanley Research Foundation.
Source: NUVO RESEARCH INC.