Proposed Acquisition of Azaya Therapeutics Assets Would Broaden Pipeline with Two Oncology Drugs for Large, Underserved Markets
Cytori Therapeutics, Inc. (CYTX) (the “Company” or “Cytori”) today announced it has entered into a definitive agreement (the “Purchase Agreement”) to acquire certain assets from privately held Azaya Therapeutics Inc., a leader in the research, development and manufacturing of nanoparticle and protein-stabilized liposomal therapeutics (the “Acquisition”). The Acquisition is subject to customary closing conditions, including obtaining third party consents and approvals and obtaining the approval of Azaya’s stockholders, and is expected to close on or prior to February 28, 2017. The Acquisition, if consummated, would provide Cytori with a proprietary liposomal nanoparticle technology platform that would expand and complement the Company’s leadership position in regenerative medicine.
Under the terms of the Purchase Agreement, at the closing of the Acquisition (the “Closing”), Cytori will issue $2 million in Cytori common stock up front, 25 percent of which will be subject to a 15-month escrow, and will also pay off approximately $2 million of Azaya’s trade payables. At the Closing, Cytori will also assume the obligation to make additional future payments to Azaya based upon (i) the achievement of certain commercialization milestones, (ii) receipt of revenue from certain licensing, sale or other transactions involving certain assets acquired from Azaya, and (iii) the achievement of certain product revenue goals. Under the terms of the Purchase Agreement, Cytori’s aggregate commercialization milestone payment obligations to Azaya will not exceed $16.25 million, and its aggregate royalty payment obligations to Azaya based on product revenues will not exceed $100 million. Further, Cytori’s obligation to pay Azaya certain license/sale or other transfer fees based on payments made to Cytori by the licensee, purchaser or other transferee of the assets will not exceed $50 million. Cytori will also undertake certain obligations pertaining to the registration of the shares issuable to Azaya at the Closing. Additionally, the Acquisition includes related intellectual property and a portfolio of investigational oncology therapies developed to meet the needs of large, underserved patient populations. Finally, at the Closing, Cytori will enter into a five-year lease for Azaya’s state-of-the-art, protein-stabilized nanoparticle manufacturing and development facility located in San Antonio, Texas, that has recently been upgraded in anticipation of commercial scale-up and manufacturing.
“Azaya’s technology and intellectual property present an exciting opportunity to marry Cytori’s cell therapy technology, which is currently in late-stage clinical trials, to a clinically proven and patented off-the-shelf pharmaceutical delivery system directly applicable to regenerative medicine,” said Marc H. Hedrick, M.D., President and Chief Executive Officer of Cytori. “We are working diligently with Azaya to consummate the Acquisition so that we can exploit the inherent unique synergies that are present and which we believe will allow Cytori to leap forward in its intended development of next-generation, ‘druggable’ regenerative medicine products. In addition, the Acquisition allows Cytori to cost-effectively expand our clinical pipeline with two promising oncology drugs that potentially have sizable, near-term, global licensing and revenue opportunities.”
Nanoparticle technology and liposomes have been used for over 20 years to improve delivery of a variety of pharmaceutical payloads throughout the body, due to liposomes’ ability to stabilize therapeutic compounds, overcome cellular and tissue uptake challenges, and improve biodistribution of compounds to target sites in vivo. The most common use of liposome is for the targeted delivery of cytotoxic drugs to tumors. Cytori research suggests that nanoparticle liposomal technology may be useful to deliver targeted regenerative therapies to sites of acute or chronic injury.
“This nanoparticle technology would provide Cytori with 2 new compounds that we believe are immediately partnerable on a global basis and one that has successfully completed all its clinical evaluation and that we expect could be launched in Europe in 2019,” said John Harris, General Manager of Cell Therapy and Regenerative Medicine at Cytori. “The Cytori and Azaya teams have been working together on this contemplated asset acquisition for a number of months, have complementary skill sets and, upon closing of the asset acquisition, are ready to move this program rapidly to key milestones in both the oncology and regenerative medicine space. Simultaneously, we will be focused on realizing the full clinical and commercial potential of our lead product, HABEO™ Cell Therapy (formerly ECCS-50), initially for treatment of scleroderma and planned readout mid year.”