Sunovion Pharmaceuticals, a Marlborough, Mass.-based pharmaceutical company focused on the central nervous system and respiratory disease, has agreed to acquire San Diego-based Elevation Pharmaceuticals, which specializes in the development of new aerosol therapies for patients with respiratory diseases.

The acquisition includes Elevation Pharmaceuticals' EP-101 product, an inhalation solution of a long-acting muscarinic antagonist (LAMA) bronchodilator that is in phase IIb clinical trials for the treatment of patients with moderate to severe chronic obstructive pulmonary disease (COPD).

Sunovion will make an upfront payment of $100 million to the shareholders of Elevation on closing of the acquisition of its shares, and thereafter it will make development milestone payments for EP-101 up to $90 million. Furthermore, after the regulatory approval, Sunovion will also make commercial milestone payments up to $210 million. Subsequent milestone payments up to $30 million could occur contingent upon the successive development of additional new programs.

"Nebulized medicine is an important treatment option for older and sicker patients—the fastest growing segment within COPD," said Bill Gerhart, founder and CEO of Elevation Pharmaceuticals. "Sunovion is the ideal sponsor to realize our original vision to significantly elevate the standard of care for this underserved patient population."

The boards of both Sunovion and Elevation have approved the transaction. The acquisition is subject to customary closing conditions.