Emergent BioSolutions Inc. (EBS) announced that it has entered into an agreement with Evolva Holding for acquiring the latter’s anti-bacterial program, the EV-035 series. The series comprises novel small molecule broad spectrum antibiotics of the 4-oxoquinolizine class targeting bacterial type IIa topoisomerase. GC-072 is the lead compound in the EV-035 series being developed with U.S. government biodefense funding.
As per the terms of the agreement, Emergent BioSolutions will make an upfront payment of $1.5 million to Evolva. After the U.S. government approves the transfer of the GC-072 contract to Emergent BioSolutions, it will pay another $4 million. Evolva is also eligible to receive development milestone payments of up to $65 million and tiered royalties of up to a maximum of 10% on product net sales generated from the EV-035 program. In its press release Evolva stated that this transaction is worth up to $70.5 million plus royalties for the company.
GC-072 has demonstrated efficacy in preclinical in vivo studies against the lethal Burkholderia pseudomallei when administered orally. This bacterium is a gram-negative pathogen classified by the Centers for Disease Control and Prevention as a Category B bioterrorism agent and a priority threat capable of being easily weaponized and disseminated. Both oral and intravenous formulations of GC-072 are being developed under a three-year contract with the Defense Threat Reduction Agency (DTRA) of the U.S. Department of Defense for $15 million.
Evolva and Emergent BioSolutions are working with DTRA to transfer the funding contract to Emergent BioSolutions. The companies expect this process to be completed in the next few weeks.
Emergent BioSolutions presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the health care sector include Sucampo Pharmaceuticals (SCMP), Valeant Pharmaceuticals International, Inc. (VRX) and Actavis (ACT). While Sucampo and Valeant Pharma carry a Zacks Rank #1 (Strong Buy), Actavis holds a Zacks Rank #2 (Buy).
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