Shionogi in up to $425 million abuse-deterrent opioid deal with Egalet

Japanese drug major Shionogi (TYO: 4507) has entered into a collaborations and licensing agreement with US biotech firm Egalet Corp (Nasdaq: EGLT) for the development and potential commercialization of multiple oral abuse-deterrent hydrocodone opioid product candidates using Egalet’s proprietary technology.

Under the terms of the deal, worth as much as $425 million in total, Egalet will receive a $10 million upfront and Shionogi has agreed to purchase up to about $15 million in common stock in a private placement to close concurrently with Egalet’s recently-filed initial public offering. Egalet is eligible to receive milestone payments upon development and approval of products under the agreement, which may exceed $300 million if multiple products are approved.

Shionogi will fund all costs associated with the development of these products. Shionogi will also have exclusive global rights to commercialize the resulting products. If any products developed under the collaboration are approved for marketing, Egalet is eligible to receive tiered royalties, ranging from the mid-single digits to the low double digits based on the net sales of such products, as well as sales-based milestone payments that could exceed $100 million based on the attainment of specified sales thresholds.