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Home » Cornerstone Therapeutics to acquire EKR Therapeutics

Cornerstone Therapeutics to acquire EKR Therapeutics

May 16, 2012
CenterWatch Staff

Cornerstone Therapeutics, a specialty pharmaceutical company based in Cary, N.C., will acquire EKR Therapeutics, a Bedminster, N.J-based privately-held specialty pharmaceutical company focused on the acute-care hospital setting.

Cornerstone will make an initial cash payment of approximately $125 million, subject to adjustment in accordance with the terms of the merger agreement, and make certain additional payments contingent upon the achievement of certain milestones related to regulatory approval of a new active ingredient supplier for Retavase and sales of Retavase. Pursuant to the merger agreement, a newly formed, wholly owned subsidiary of Cornerstone will merge with and into EKR, with EKR continuing after the merger as the surviving corporation and a wholly owned subsidiary of Cornerstone. The EKR board of directors has approved the merger agreement and recommended its adoption by EKR's stockholders.

The acquisition expands Cornerstone's product offerings and commercial infrastructure in the hospital market. The transaction is subject to customary closing conditions, including adoption of the merger agreement by EKR's stockholders and expiration or termination of any waiting period under U.S. anti-trust laws. The transaction is currently expected to close in late June 2012.

Cornerstone will acquire two product rights from EKR: Cardene I.V., a short-term treatment of hypertension when oral therapy is not feasible or desirable; and Retavase, used in the management of acute myocardial infarction (AMI) in adults, for the improvement of ventricular function following AMI, the reduction of the incidence of congestive heart failure and the reduction of mortality associated with AMI. In 2011, EKR generated $58 million in net revenue, primarily from sales of Cardene I.V. In 2013, Cornerstone will target FDA approval of a new active ingredient supplier and re-launch of Retavase, which could increase revenues significantly versus 2012. These products complement Cornerstone's existing hospital products: Curosurf, which treats neonatal respiratory distress syndrome (RDS) in preterm infants, as well as CRTX 080, a product candidate for treatment of hyponatremia.

"This transaction brings Cornerstone critical mass in the hospital-based therapeutics area and represents a major step forward in our strategy to focus on the hospital channel," said Craig A. Collard, CEO of Cornerstone. "With a significantly expanded product portfolio and larger sales and additional account management infrastructure, we believe we have enhanced our platform to drive future growth."

Collard continued, "We plan to pursue additional hospital product licensing opportunities and company acquisitions that complement our enhanced hospital presence. We believe this strategy will position Cornerstone for growth and bring the company to the next level of value creation."

In connection with the EKR transaction, Cornerstone and its majority shareholder, Chiesi Farmaceutici, SpA, have entered into a debt financing commitment, including customary covenants, whereby Chiesi will provide to Cornerstone a senior secured term loan facility comprised of (i) a five-year Term Loan A of up to $60 million at 7.5% interest per annum and (ii) a five-year Term Loan B of up to $30 million at 6.5% per annum. Term Loan B may be converted into common stock of the company at $7.098 per share at Chiesi's option at any time during the 24 months following the closing of the debt financing.

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