Azur buys $54m anti-psychotic drug patent

Drug firm Azur, the investment vehicle of former Elan executive Séamus Mulligan, has acquired an anti-psychotic drug in the US in a deal worth up to $54 million (€39.69 million).

The deal with Nasdaq-listed Avanir Pharmaceuticals is Azur's third acquisition since it raised €40 million in capital from private clients of Davy Stockbrokers in 2005. The value of those three deals stands at more than €68 million. Now engaged in a big effort to achieve scale in the US, Azur specialises in the sale and distribution of strong drug products that are nearing the end of their patents.

Its latest acquisition, FazaClo, is used in the treatment of severely-ill schizophrenic patients.

The deal will almost double its staff to 140 people, with the addition of 65 sales representatives among 73 Avanir staff who work with the drug. Such personnel are now likely to sell other Azur products.

Mr Mulligan heralded the deal as an important step in the achievement of critical mass in the US market. Azur plans to add new products and development projects in central nervous system treatments, urology and women's health, he said. "We will commence additional FazaClo reformulation activities with a view to enhancing the product."

FazaClo will have annual revenues this year of some $25 million, Azur said. Prior to this deal, the company was expecting to generate revenues this year of $20 million. The transaction is subject to certain conditions and is expected to close in late July.

Azur will pay $42 million to Avanir at the close and up to another $10 million in contingent payments based on regulatory milestones during 2009. Azur will also pay up to $2 million in future royalties based on 3 per cent of annual net product revenues for FazaClo in the US in excess of $17 million.

Azur also assumes certain of Avanir's earn-out obligations to the original developer of the product, Alamo Pharmaceuticals, which arise upon the achievement of sales milestones.

In February, Azur spent more than €20 million on the buy-out of the privately held US firm Pharmelle of Phoenix, Arizona. That company sells urology and female health products.