Aires Pharma signs option deal with Novartis based on Aironite worth up to $250 million; raises $20 million

Privately-held, US clinical stage pharmaceutical company Aires Pharmaceuticals had a successful fundraising day yesterday, completing a $20 million series B financing and further bolstering its cash reserves by entering into an agreement with Swiss drug major Novartis (NOVN: VX), granting the latter an exclusive option to acquire Aires following the successful completion of a Phase II clinical study of Aironite, an inhaled nitric oxide prodrug to treat pulmonary arterial hypertension.

The agreement also includes a right to an exclusive worldwide license under pre-agreed conditions. Including the initial acquisition payment plus potential additional regulatory and sales milestone payments, the deal with Novartis could reach $250 million for San Diego-based Aires.

The arrangement provides an important option to investors: a potential exit strategy for cashing out their holdings well in advance of spending the hundreds of millions of dollars it will take to move Aironite through large Phase III clinical trials and a review by the Food and Drug Administration, commented the San Diego Union Tribune.