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Cosmo, RedHill Biopharma enter strategic collaboration for US rights to Aemcolo

Cosmo Pharmaceuticals NV and RedHill Biopharma Ltd. have entered into an exclusive license agreement for the U.S. rights to traveler's diarrhea drug Aemcolo.

As part of the deal, the Dublin-based pharmaceutical company will invest $36.3 million in RedHill at $7 per American depositary share, or ADS.

Tel-Aviv, Israel-based RedHill will have exclusive U.S. rights to commercialize Aemcolo, and Cosmo will be the exclusive supplier of the drug. The license agreement also provides for granting certain rights to RedHill for the potential development of additional uses for Aemcolo, as well as arrangements related to other potential products of Cosmo.

RedHill entered into the collaboration primarily to prepare for the launch of its oral capsule Talicia to treat H. pylori infection, the company said in an Oct. 18 press release.

In addition to the $36.3 million investment, RedHill will issue 1,714,286 ADSs valued at about $12 million to Cosmo as an up-front payment for the rights granted under the Aemcolo license. The Israeli pharmaceutical company will also pay Cosmo a royalty percentage on net sales of the drug in the U.S.

Under the license agreement, Cosmo is also eligible for potential regulatory and commercial milestone payments of up to $100 million and is entitled to nominate one member to RedHill's board.