Cornerstone (CRTX) to Acquire EKR Therapeutics for $125M + Milestones
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Cornerstone Therapeutics Inc. (Nasdaq: CRTX) and EKR Therapeutics, Inc. today announced that they have entered into a definitive merger agreement whereby Cornerstone Therapeutics will acquire EKR Therapeutics, a privately-held specialty pharmaceutical company focused on the acute-care hospital setting. The acquisition expands Cornerstone's product offerings and commercial infrastructure in the hospital market. The transaction is subject to customary closing conditions, including adoption of the merger agreement by EKR's stockholders and expiration or termination of any waiting period under U.S. anti-trust laws. The transaction is currently expected to close in late June 2012.
As part of the transaction, Cornerstone will acquire product rights to CARDENE I.V. and RETAVASE. CARDENE I.V. is indicated for the short-term treatment of hypertension when oral therapy is not feasible or desirable. RETAVASE is indicated for use in the management of acute myocardial infarction (AMI) in adults, for the improvement of ventricular function following AMI, the reduction of the incidence of congestive heart failure and the reduction of mortality associated with AMI. In 2011, EKR generated $58 million in net revenue, primarily from sales of CARDENE I.V. In 2013, Cornerstone is targeting FDA approval of a new active ingredient supplier and relaunch of RETAVASE, which could increase revenues significantly versus 2012. These products complement Cornerstone's existing hospital products: CUROSURF, which is indicated for the treatment of neonatal respiratory distress syndrome (RDS) in preterm infants, as well as CRTX 080, a product candidate for treatment of hyponatremia.
Under the terms of the agreement, Cornerstone will make an initial cash payment of approximately $125 million, subject to adjustment in accordance with the terms of the merger agreement, and make certain additional payments contingent upon the achievement of certain milestones related to regulatory approval of a new active ingredient supplier for RETAVASE and sales of RETAVASE during approximately the first three years following commercial relaunch. Pursuant to the merger agreement, a newly formed, wholly owned subsidiary of Cornerstone will merge with and into EKR, with EKR continuing after the Merger as the surviving corporation and a wholly owned subsidiary of Cornerstone. The EKR Board of Directors has approved the merger agreement and recommended its adoption by EKR's stockholders.
In connection with the EKR transaction, Cornerstone and its majority shareholder, Chiesi Farmaceutici, SpA, have entered into a debt financing commitment, including customary covenants, whereby Chiesi will provide to Cornerstone a senior secured term loan facility comprised of (i) a five-year Term Loan A of up to $60 million at 7.5% interest per annum and (ii) a five-year Term Loan B of up to $30 million at 6.5% per annum. Term Loan B may be converted into common stock of the Company at $7.098 per share at Chiesi's option at any time during the 24 months following the closing of the debt financing.
Stifel Nicolaus Weisel is acting as financial advisor and Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. is acting as legal advisor to Cornerstone Therapeutics. Lazard is acting as financial advisor and Foley & Lardner LLP is acting as legal advisor to EKR.
As part of the transaction, Cornerstone will acquire product rights to CARDENE I.V. and RETAVASE. CARDENE I.V. is indicated for the short-term treatment of hypertension when oral therapy is not feasible or desirable. RETAVASE is indicated for use in the management of acute myocardial infarction (AMI) in adults, for the improvement of ventricular function following AMI, the reduction of the incidence of congestive heart failure and the reduction of mortality associated with AMI. In 2011, EKR generated $58 million in net revenue, primarily from sales of CARDENE I.V. In 2013, Cornerstone is targeting FDA approval of a new active ingredient supplier and relaunch of RETAVASE, which could increase revenues significantly versus 2012. These products complement Cornerstone's existing hospital products: CUROSURF, which is indicated for the treatment of neonatal respiratory distress syndrome (RDS) in preterm infants, as well as CRTX 080, a product candidate for treatment of hyponatremia.
Under the terms of the agreement, Cornerstone will make an initial cash payment of approximately $125 million, subject to adjustment in accordance with the terms of the merger agreement, and make certain additional payments contingent upon the achievement of certain milestones related to regulatory approval of a new active ingredient supplier for RETAVASE and sales of RETAVASE during approximately the first three years following commercial relaunch. Pursuant to the merger agreement, a newly formed, wholly owned subsidiary of Cornerstone will merge with and into EKR, with EKR continuing after the Merger as the surviving corporation and a wholly owned subsidiary of Cornerstone. The EKR Board of Directors has approved the merger agreement and recommended its adoption by EKR's stockholders.
In connection with the EKR transaction, Cornerstone and its majority shareholder, Chiesi Farmaceutici, SpA, have entered into a debt financing commitment, including customary covenants, whereby Chiesi will provide to Cornerstone a senior secured term loan facility comprised of (i) a five-year Term Loan A of up to $60 million at 7.5% interest per annum and (ii) a five-year Term Loan B of up to $30 million at 6.5% per annum. Term Loan B may be converted into common stock of the Company at $7.098 per share at Chiesi's option at any time during the 24 months following the closing of the debt financing.
Stifel Nicolaus Weisel is acting as financial advisor and Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. is acting as legal advisor to Cornerstone Therapeutics. Lazard is acting as financial advisor and Foley & Lardner LLP is acting as legal advisor to EKR.
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