Santarus gets rights to inflammatory/autoimmune disease candidate by buying Covella

In what has been a busy acquisitive week for the US specialty biopharma firm, Santarus (Nasdaq: SNTS) has acquired the exclusive worldwide rights to a humanized anti-VLA-1 antibody, through the acquisition of closely held Covella Pharmaceuticals, and a related amended license agreement with Biogen Idec. The anti-VLA-1 antibody was initially developed by Biogen Idec and licensed to Covella in January 2009.

Under the terms of the acquisition, Santarus is paying a total in cash and stock of approximately $1.8 million in a combination of upfront consideration, assumption of Covella liabilities and transaction expenses. Santarus will also make clinical and regulatory milestone payments based on success in developing product candidates, and will pay a royalty on net sales of any commercial products resulting from the anti-VLA antibody technology.

Specifically, Santarus paid a total of $648,000 in upfront consideration to the Covella stockholders, of which 75% consisted of unregistered shares of Santarus common stock (valued at the closing price on September 9, 2010 and subject to a 12-month lock-up period) and 25% consisted of cash. Santarus also assumed responsibility for payment of approximately $1.2 million in Covella liabilities and transaction expenses, including the $600,000 repayment to Westfield (which owned 3.5% of Covella prior to the Santarus deal).
Under the amended license agreement, Santarus will make additional clinical, regulatory and sales milestone payments to Biogen Idec based on success in developing and commercializing product candidates and will pay a royalty on net sales of products developed under the license agreement.