Supernus Pharmaceuticals (SUPN 47.85, -1.00) sits 2.1% lower on Friday after the company announced the acquisition of privately-held company developing a novel treatment for epilepsy Biscayne Neurotherapeutics (Biscayne).
Per the deal, Supernus will obtain worldwide rights (excluding certain markets in Asia where rights have been out-licensed) to Biscayne’s product candidate that is in Phase I clinical development and that has received an Orphan Drug designation from the U.S. Food and Drug Administration (FDA) for the treatment of Dravet Syndrome, a severe form of childhood epilepsy. Supernus will also obtain rights to all the product candidate’s underlying and related intellectual property (IP).
The transaction, expected to close in the next few weeks, provides for an upfront payment of $15 million payable by Supernus to the current Biscayne security holders. Additional payments payable by Supernus include $73 million contingent on achieving certain development milestones and up to $95 million contingent upon achieving certain sales milestones. Supernus will pay a low single digit royalty on net sales to Biscayne and any applicable royalties to third parties for the use of in-licensed IP. The maximum combined royalty Supernus will pay to all parties is about 12%, depending on the IP covering the marketed product and the applicable tiered sales levels.
The company’s development program which will be referred to as SPN-817 will utilize a novel synthetic form of huperzine A which is a potent acetyl cholinesterase inhibitor with pharmacological activities in CNS conditions such as epilepsy. SPN-817 will have a new chemical entity status (NCE) in the U.S. market, and Supernus expects to have significant IP protecting this product candidate through its own research and development efforts as well as the in-licensed IP.
Supernus will focus on completing and optimizing the synthesis process of the drug and the development of a novel dosage form. Supernus plans on studying SPN-817 initially in catastrophic pediatric epilepsy disorders such as Dravet Syndrome. A Phase I proof-of-concept trial is currently underway in adult patients with refractory complex partial seizures to study the safety and pharmacokinetics profile of a new extended release formulation.
For full year 2018, Supernus is updating its prior guidance for research and development expenses and operating earnings to account for the one-time upfront expense of $15 million, and is reiterating its prior guidance for net product sales: net product sales are still expected in the range of $385-400 million; research and development expenses of approximately $95 million, compared to $80 million previously; operating earnings in the range of $115-125 million, compared to the previously expected range of $130-140 million.
After getting smoked post-earnings in early August, shares of SUPN have staged a modest recovery. The stock touched a multi-month low following the August earnings, but has since then recouped about 15% of its value. Shares bumped up against the 50-day simple moving average (49.23) yesterday and failed to break through that level, but still hold a modest lead over the 200-day (46.64).