Cipla to acquire US-based Avenue, paves way for speciality business

PT Jyothi Datta Mumbai | Updated on November 13, 2018 Published on November 13, 2018

Drugmaker Cipla’s subsidiary in the United States has formalised a two-stage agreement to acquire Avenue Therapeutics Inc for about $215 million (an estimated ₹1,563 crore).

Avenue Therapeutics is focussed on the development and commercialisation of an intravenous version of Tramadol, a painkiller. The deal gets Cipla an entry into the US speciality business segment that could be developed across therapeutic areas, besides providing an opportunity to be a solution for opioid abuse (a key problem in the US), Cipla Global Chief Financial Officer Kedar Upadhye told BusinessLine.

Executed through Cipla’s US subsidiary InvaGen Pharmaceuticals Inc, the deal involves two closing stages for the proposed acquisition.

The first stage involves InvaGen or its affiliates acquiring up to 33.3 per cent stake in Avenue by buying new shares for $35 million. Based on current assumptions, this involves 5,833,333 shares of Avenue’s common stock issued at $6 per share, Cipla said. With the closing of the stock issuance, InvaGen or its affiliates will appoint three members (including one independent) on Avenue’s seven-member board of directors, the company added.

The second stage closing involves InvaGen or its affiliates acquiring the remaining shares of Avenue’s common stock for up to $180 million, or approximately $13.92 per share, the company said.

The second stage closing is subject to certain criteria, said Upadhye, including getting approval from the US Food and Drug Administration (possibly in late 2020-21), labelling, scheduling and the absence of restrictions with respect to IV Tramadol.

The deal will be financed through a dollar-based loan in the US, he said. Compared to industry peers like Dr Reddy’s, Sun Pharma or even Lupin, Cipla has been a late entrant into the US.

US opportunity

However, Upadhye said that the US being the largest pharmaceutical market, it still holds out the largest opportunity to optimise on investments.


Commenting on the Avenue deal, Umang Vohra, Managing Director and Global Chief Executive Officer, said in a statement that the investment helped establish their presence in the US speciality institutional business besides sticking with the stated intention of building a speciality pipeline in the US.

“IV Tramadol offers a novel mechanism of action among intravenous analgesics and could be an important new therapy that fills a significant gap in pain management,” added Lucy Lu, Avenue’s President and Chief Executive.

Published on November 13, 2018
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