Avadel Pharmaceuticals plc has entered into a license agreement with Serenity Pharmaceuticals LLC. The agreement grants Avadel the sole right to commercialize and further develop Noctiva in the United States and Canada. Noctiva is a proprietary low-dose formulation of desmopressin acetate administered through a patent-protected intranasal delivery system. It is the first and only product approved by the U.S. Food and Drug Administration (FDA) for the treatment of nocturia due to nocturnal polyuria.

Key Highlights:

  • Deal includes $50 million upfront payment; funded by cash on hand, and a near term expected improvement in the company’s effective tax rate.
  • Current nocturia-treated patient pool estimated at over $2 billion with no FDA approved treatment options until now, and market growth potential.
  • Long-term growth opportunity with current intellectual property through mid-2030, and potential opportunities to extend patent life.
  • Balance sheet remains strong with no bank debt, and adequate cash to fund ongoing operations, including completion of the Company’s REST-ON Phase III trial.

Nocturia results in frequent nighttime urination, which may prevent patients from experiencing a normal, restful sleep cycle. Nocturia is associated with a number of comorbidities and health-related consequences, including an increase in the risk of nighttime falls and fractures, loss of sleep, decreased work productivity, impaired daytime functioning and compromised quality of life.

Mike Anderson, Avadel’s CEO, says in a release, “Licensing Noctiva is an important step in our strategic growth plan and positions Avadel as a fully-integrated specialty pharmaceutical company, with a profitable base and a significant ongoing Phase III trial. Noctiva is the first and only FDA approved product to treat nocturia due to nocturnal polyuria, and aligns with our mission of offering patients unique and differentiated branded products. Noctiva has the potential to deliver significant value to Avadel, the large, underserved patient population who suffer from nocturia and our shareholders.”

Samuel Herschkowitz, MD, CEO of Serenity, says, “Approximately $200 million has been invested in order to develop and gain FDA approval for Noctiva, which is the first drug therapy shown to be safe and effective for the treatment of nocturia. The clinical program for Noctiva included four Phase 3 studies and two long-term safety trials and demonstrated significant reductions in the mean number of nocturic episodes, and improved quality of life. We believe Avadel is the right partner with the experience, capability, and commitment to bring Noctiva to market for the benefit of patients, providers, and payors.”

Terms of the final agreement, which can be found in detail on Avadel’s 8-K filed with the SEC on September 5, 2017, include an upfront payment of $50 million, $20 million due at the earlier of full scale commercial launch or June 30, 2018, performance-based milestones tied to specific Noctiva net sales thresholds, and a tiered royalty rate structure based upon achievement of annual net sales. As a result of the licensing agreement, the company expects an improvement in its effective tax rate, as expenses associated with the launch will partially offset US taxable income. Avadel’s strong balance sheet, with $173 million in cash and marketable securities and no bank debt at June 30, 2017, means the company is able to self-fund the licensing acquisition of Noctiva and subsequent near-term commercialization plans.

The transaction is set to close upon expiration of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. T.R. Winston & Company, LLC, served as financial and strategic advisor to Serenity.