Cadence Pharmaceuticals Signs Option Agreement to Acquire Incline Therapeutics
Company Also Closes $30 Million Debt Financing
SAN DIEGO, June 21 /PRNewswire-FirstCall/ -- Cadence Pharmaceuticals, Inc. (Nasdaq: CADX), a biopharmaceutical company focused on in-licensing, developing and commercializing proprietary product candidates principally for use in the hospital setting, announced today that it has signed an agreement providing Cadence with an exclusive option to acquire Incline Therapeutics, Inc., a privately held specialty pharmaceutical company.
The company simultaneously announced that it has closed a $30 million secured loan facility with Oxford Finance Corporation, Silicon Valley Bank and GE Financial Services, Inc.
Option to Acquire Incline Therapeutics
Incline is developing IONSYSTM (fentanyl iontophoretic transdermal system), an investigational product candidate intended to provide patient-controlled analgesia for adult inpatients requiring opioids following surgery. IONSYS is a compact, needle-free, self-contained, pre-programmed system designed to be applied to the skin on the upper arm or chest and activated by patients double clicking a button on the system. A generally imperceptible electrical current then actively delivers a small dose of the short-acting opioid analgesic fentanyl directly through the skin and into the systemic circulation.
IONSYS was approved by both the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA) in 2006; however, IONSYS is not currently marketed anywhere in the world. Before this product candidate may be marketed, Incline must obtain regulatory approval from both the FDA and EMA for new patient safety features being developed into the system.
"We believe that this agreement provides Cadence with the opportunity to build our pipeline and strengthen our franchise in the hospital market, while effectively managing our cash," said Ted Schroeder, President and CEO of Cadence. "This transaction is consistent with our long-standing strategy to focus on products for use in the hospital that we believe have a clear clinical and regulatory path to approval. If approved, we believe that IONSYS will represent a potentially significant commercial opportunity and be an excellent strategic fit with our OFIRMEVTM (acetaminophen) injection product candidate in the post-surgical setting."
Incline separately announced today that it has entered into an agreement to complete a $43 million Series A venture financing, which will be used primarily to fund the development of IONSYS. Cadence will receive $500,000 of Incline Series A preferred stock, and Mr. Schroeder has been appointed as Cadence's representative on the Incline board of directors.
Upon closing of the transaction, David Socks, Senior Vice President, Corporate Development and Strategy of Cadence, has resigned from Cadence to join Incline as President and Chief Operating Officer.
Incline Option Agreement Terms
Under the terms of the option agreement, Cadence will pay Incline a $3.5 million upfront option fee and a second $3.5 million fee upon the commencement of the second option period if Cadence has not yet exercised its option to acquire Incline. The second option period commences on the later to occur of 12 months or the date on which Incline receives the second tranche of its Series A financing and extends until the earlier to occur of 42 months or the date on which Incline submits a supplemental New Drug Application for IONSYS to the FDA, subject to certain limitations. Cadence may exercise its option to acquire Incline at any time during the first option period for an amount not to exceed $135 million and at any time during the second option period for an amount not to exceed $228 million plus payment of an additional amount not to exceed $57 million upon FDA approval of IONSYS.
Secured Loan Facility
The secured loan facility is available to the Company in two advances, with the first advance of $20 million to be made no later than June 30, 2010, and the second advance of $10 million to be made upon approval by the U.S. Food and Drug Administration of Cadence's investigational product candidate, OFIRMEVTM (acetaminophen) injection on or before December 31, 2010. This secured loan facility replaces the company's prior facility with the same loan syndicate, established in February 2006, which currently has an outstanding balance of approximately $3.3 million.
"This funding strengthens our balance sheet at an attractive cost of capital while minimizing dilution as we prepare for the potential launch of our investigational product candidate, OFIRMEVTM (acetaminophen) injection," said Ted Schroeder, Cadence's President and Chief Executive Officer.
Further information with respect to both transactions is contained in a Current Report on Form 8-K which will be filed today with the Securities and Exchange Commission.
Conference Call and Webcast Details
Cadence management will host a conference call on June 21, 2010 at 4:30 p.m. Eastern Time (1:30p.m. Pacific Time) and interested investors may participate in the conference call by dialing (877) 303-9145 (domestic) or (760) 536-5203 (international). To access the webcast, please visit the company's website at www.cadencepharm.com and go to the Investor Relations page. A replay of the webcast will be available approximately two hours after the call.
About Inpatient Post-Operative Pain Management
More than 20 million inpatient surgical procedures requiring pain management are estimated to occur in the United States each year. Current treatment methods include bolus injections, regional nerve blockade, epidural infusions, and intravenous patient-controlled analgesia (IV PCA). IV PCA systems are controlled infusions pumps that deliver a prescribed amount of an intravenous opioid when a patient activates a button connected to the pump. Although it is estimated that approximately 50% of patients receive IV PCA after surgery, IV PCA has been associated with programming, medication, and pump errors, IV line infections, needlestick injuries, and limited patient mobility.
About Cadence Pharmaceuticals, Inc.
Cadence Pharmaceuticals is a biopharmaceutical company focused on in-licensing, developing and commercializing proprietary product candidates principally for use in the hospital setting. On May 4, 2010 Cadence resubmitted a New Drug Application for its investigational product candidate, OFIRMEVTM (acetaminophen) injection for the treatment of pain and fever in adults and children. The FDA has assigned a new Prescription Drug User Fee Act (PDUFA) action date for OFIRMEV of November 4, 2010. For more information about Cadence, please visit www.cadencepharm.com.
About Incline Therapeutics, Inc.
Incline Therapeutics is a privately-held, hospital-focused specialty pharmaceutical company focused on the development of IONSYS (fentanyl iontophoretic transdermal system). Incline is financed by leading life science venture capital firms and led by a management team with significant pharmaceutical and medical device industry experience. The company is based in Redwood City, California.
Statements included in this press release that are not a description of historical facts are forward-looking statements. Words such as "plans," "believes," "expects," "anticipates," and "will," and similar expressions, are intended to identify forward-looking statements, and are based on Cadence's current beliefs and expectations. Forward-looking statements include statements regarding: Cadence's ability to complete future drawdowns under the loan facility; the company's ability to successfully prepare for the launch OFIRMEV; the potential for Cadence to ultimately acquire Incline, and the anticipated strategic benefit to Cadence of any such acquisition; the likelihood that Incline will successfully develop and obtain regulatory approval from the FDA and EMA for IONSYS; and the commercial potential for this product candidate, if approved. All such forward-looking statements are based on Cadence's current beliefs and expectations, and should not be regarded as a representation by Cadence that any of its plans will be achieved. Actual results may differ materially from those set forth in this press release due to the risks and uncertainties inherent in Cadence's and Incline's businesses, including, without limitation: Cadence's ability to comply with the terms of the loan agreement; the potential for an event of default under the loan agreement, and the corresponding risk of acceleration of repayment and potential foreclosure on the assets pledged to secure the line of credit; the potential for the FDA to require additional data or information as part of its review process of the pending NDA for OFIRMEV; the risk that the FDA may not approve OFIRMEV or IONSYS, and that the EMA may not approve IONSYS, on a timely basis or at all; the dependence of Cadence on the success of OFIRMEV, and of Incline on IONSYS, as each respective company's only product candidate; Cadence's reliance on Incline to develop and obtain regulatory approval for IONSYS; the potential that Incline's efforts to develop improved patient safety features for IONSYS may be unsuccessful, or that Incline may not develop a risk evaluation and management strategy (REMS) for IONSYS that is acceptable to the FDA; the potential that Cadence may require substantial additional funding in order to obtain regulatory approval for and commercialize OFIRMEV, and to exercise the option to acquire Incline and obtain regulatory approval for and commercialize IONSYS, and the risk that Cadence may not be able to raise sufficient capital when needed, or at all; the risk that delays in the regulatory approval or commercial launch of OFIRMEV or IONSYS will enable competitors to further entrench existing products, or develop and bring new competing products to market before the launch of these product candidates; the potential that unexpected adverse side effects or inadequate therapeutic efficacy of OFIRMEV or IONSYS may delay or prevent regulatory approval or commercialization, or result in recalls or product liability claims; other delays or difficulties in the development, testing or manufacturing of OFIRMEV or IONSYS; the risk that Incline may breach any of the agreements under which it licenses the rights to IONSYS from others, and lose the ability to continue to develop and commercialize this product candidate; the scope and validity of patent protection for OFIRMEV and IONSYS, and the risk that the development or commercialization of these product candidates may infringe the intellectual property rights of others; and other risks detailed in Cadence's prior press releases as well as in Cadence's periodic public filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement and Cadence undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof. This caution is made under the safe harbor provisions of Section 21E of the Private Securities Litigation Reform Act of 1995.