Cytori will acquire from privately-held Azaya Therapeutics and its nanoparticle cancer drug candidates which have considerable revenue-generating prospects with worldwide licensing in the near-term. The first is ATI-0918, a nanoparticle liposomal formulation of doxorubicin hydrochloride for treating breast cancer, Kaposi’s sarcoma, multiple myeloma and ovarian cancer. The other is ATI-1123, another nanoparticle-stabilized liposomal formulation of docetaxel intended to treat solid tumor cancers of patients who have failed other therapies. Post acquisition, Cytori will proceed with Phase II clinical studies of the drug.
The acquisition is subject to customary closing conditions, including obtaining third party consents and approvals and obtaining the approval of Azaya’s stockholders, and is expected to close on or prior to February 28, 2017. The acquisition, if consummated, would provide Cytori with a proprietary liposomal nanoparticle technology platform that would expand and complement the company’s leadership position in regenerative medicine.
Financial terms of the deal
Under the terms of the purchase agreement, at the closing of the acquisition Cytori will issue $2 million in Cytori common stock up front, 25% of which will be subject to a 15-month escrow, and will also pay off around $2 million of Azaya’s trade payables. At the closing, Cytori will also assume the obligation to make additional future payments to Azaya based upon (i) the achievement of certain commercialization milestones, (ii) receipt of revenue from certain licensing, sale or other transactions involving certain assets acquired from Azaya, and (iii) the achievement of certain product revenue goals.
Cytori’s aggregate commercialization milestone payment obligations to Azaya will not exceed $16.25 million, and its aggregate royalty payment obligations to Azaya based on product revenues will not exceed $100 million. Furthermore, Cytori’s obligation to pay Azaya certain license/sale or other transfer fees based on payments made to Cytori by the licensee, purchaser or other transferee of the assets will not exceed $50 million
The Acquisition includes related intellectual property and a portfolio of investigational oncology therapies developed to meet the needs of large, underserved patient populations. Finally, at the closing, Cytori will enter into a five-year lease for Azaya’s state-of-the-art, protein-stabilized nanoparticle manufacturing and development facility located in San Antonio, Texas, that has recently been upgraded in anticipation of commercial scale-up and manufacturing.
“Azaya’s technology and intellectual property present an exciting opportunity to marry Cytori’s cell therapy technology, which is currently in late-stage clinical trials, to a clinically proven and patented off-the-shelf pharmaceutical delivery system directly applicable to regenerative medicine,” said Marc Hedrick, president and chief executive of Cytori, adding: “We are working diligently with Azaya to consummate the acquisition so that we can exploit the inherent unique synergies that are present and which we believe will allow Cytori to leap forward in its intended development of next-generation, ‘druggable’ regenerative medicine products. In addition, the acquisition allows Cytori to cost-effectively expand our clinical pipeline with two promising oncology drugs that potentially have sizable, near-term, global licensing and revenue opportunities.”
“The proposed transaction with Cytori will put Azaya and its stockholders in a position to benefit from potential global commercialization of our ATI-0918 generic liposomal doxorubicin product that has been shown to be bioequivalent to Johnson & Johnson’s branded product in Europe, as well as further the clinical development of ATI-1123, our proprietary liposomal encapsulated docetaxel,” said John Kerr, Azaya’s chairman. “In addition, this transaction provides Azaya’s stockholders, through Azaya’s ownership of Cytori shares, the ability to participate in any future success of Cytori’s regenerative medicine portfolio,” he noted.
