Covington Advises AstraZeneca on Strategic Collaboration with Circassia
March 17, 2017
LONDON—Covington advised AstraZeneca on its strategic collaboration with Circassia Pharmaceuticals plc, a respiratory biopharmaceutical company, for the development and commercialisation of Tudorza and Duaklir* in the U.S.
Tudorza and Duaklir are inhaled respiratory medicines for the treatment of chronic obstructive pulmonary disease (COPD). Tudorza was approved and launched in the U.S. in 2012. Duaklir is expected to be submitted for U.S. regulatory review in 2018.
Under the terms of the collaboration, Circassia will lead the promotion of Tudorza in the U.S. and has been granted an option to gain the full commercial rights in the future. Circassia has also been granted the rights to Duaklir in the U.S. AstraZeneca will receive a minority equity stake in Circassia. AstraZeneca will complete ongoing development activities and continue to manufacture and supply both medicines.
Under the terms of the agreement, AstraZeneca will receive $50 million in Ordinary Shares in Circassia, calculated by reference to the lower of the weighted average share price of Circassia over the period 20 days (i) prior to signing or (ii) prior to closing (subject to a maximum number of shares). Circassia will also pay $100 million at the earlier of approval of Duaklir in the U.S. or 30 June 2019. Should Circassia decide to exercise the option to sub-license the commercial rights to Tudorza in the US, Circassia will pay up to a further $80 million.
The two companies will share U.S. profits from Tudorza equally and AstraZeneca will continue to book U.S. Product Sales of Tudorza until Circassia’s potential exercise of the option. Circassia will pay AstraZeneca tiered percentage royalties on potential future U.S. sales of Duaklir. In addition, Circassia will contribute up to $62.5 million towards the development activities for the medicines.
The agreement is expected to complete in the second quarter of 2017, subject to approval by shareholders of Circassia and customary closing conditions.
Working together with AstraZeneca’s in-house legal team, the Covington team was led by corporate partners Lucinda Osborne and James Halstead.
*Duaklir is a registered trademark in certain European countries. The U.S. trademark is to be confirmed.
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