India's Cipla Ltd. agreed to acquire Avenue Therapeutics Inc., a New York-based company that markets post-operative pain drug Tramadol.
Through its unit InvaGen Pharmaceuticals Inc., Cipla will acquire 33.3% of Avenue Therapeutics for $35 million. This first-stage closing stake is expected to comprise 5,833,333 shares at $6 each.
Avenue Therapeutics' remaining shares will be acquired in a second-stage closing for up to $180 million, pursuant to a reverse triangular merger with Avenue remaining as the surviving entity. The shares are expected to be worth $13.92 each.
The second stage closing is subject to conditions including the U.S. Food and Drug Administration's approval of intravenous, or IV, Tramadol. Avenue stockholders will receive certain contingent value rights relating to IV Tramadol's annual net sales and gross profit targets.
The transaction will be subject to Avenue stockholders' approval and regulatory approvals, among other closing conditions.
"Our investment in and proposed acquisition of Avenue establishes our presence in the specialty institutional business in the U.S.," Umang Vohra, Cipla's managing director and global CEO, said in a news release.
Hughes Hubbard & Reed LLP acted as legal counsel to Cipla.
Torreya Capital LLC is acting as exclusive financial adviser to Avenue, with Oppenheimer & Co. Inc. having provided a fairness opinion on the transaction to Avenue's board of directors. Alston & Bird LLP and Richards Layton & Finger PA acted as the company's legal counsel.
Avenue Therapeutics is a subsidiary of Fortress Biotech Inc.
