TIDMCIR
RNS Number : 7819Z
Circassia Pharmaceuticals Plc
17 March 2017
Circassia Pharmaceuticals plc
17 March 2017
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA,
AUSTRALIA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO
DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT
JURISDICTION
This announcement is not an advertisement and not an offer of
securities for sale in any jurisdiction, including in the United
States, Canada, Australia, Japan and South Africa. The securities
referred to herein may not be sold in the United States absent
registration or an exemption from registration under the U.S.
Securities Act of 1933, as amended (the "Securities Act").
Circassia Pharmaceuticals plc does not intend to register any of
the securities in the United States or to conduct a public offering
of the securities in the United States.
Neither this announcement nor anything contained herein shall
form the basis of, or be relied upon in connection with, any offer
or commitment whatsoever in any jurisdiction. Any decision in
respect of the Transaction should be made solely on the basis of
the information that is contained in the combined prospectus and
circular to be published by the Company in due course in connection
with the Transaction.
Circassia Pharmaceuticals plc
Proposed Collaboration and Securing of Certain U.S. Commercial
Rights to Tudorza(R) and Duaklir(R) from AstraZeneca for
Consideration of up to US$230 Million (including US$50 Million in
Ordinary Shares (the "Consideration Shares") on Completion) plus
future royalties based on Duaklir(R) sales (the "Transaction")
HIGHLIGHTS
-- Circassia Pharmaceuticals plc ("Circassia" or the "Company"),
a specialty pharmaceutical company focused on respiratory disease
and allergy, has reached agreement with AstraZeneca to enter into a
collaboration and secure certain U.S. commercial rights to two
chronic obstructive pulmonary disease products, Tudorza(R) and
Duaklir(R)*, for a maximum total consideration of US$230 million,
plus future sales based royalties upon the commercialisation of
Duaklir(R) in the United States, following potential approval.
-- The Transaction provides an opportunity to transform
Circassia's product portfolio and commercial presence.
-- The Products represent a clear strategic fit with Circassia's
focus on respiratory medicines and will leverage and enhance
Circassia's commercial infrastructure.
-- Tudorza(R) is approved in the United States and approximately
60 further countries around the world; total AstraZeneca revenues
related to worldwide sales of the product were US$170 million in
2016, of which US$80 million was in the United States.
-- Duaklir(R) is in phase III development in the United States
for the treatment of COPD; it was initially approved in the
European Union in 2014 and is approved in approximately 50
countries worldwide.
-- The Transaction will support the immediate expansion of the
Company's commercial infrastructure in the United States,
positioning Circassia for future product acquisition and
in-licensing opportunities.
-- The consideration will be structured as follows:
o Circassia will issue Ordinary Shares with a value of US$50
million to AstraZeneca on completion of the Transaction;
o Circassia will pay AstraZeneca deferred non-contingent
consideration of US$100 million on the earlier of: (i) 30 June
2019; and (ii) the approval of Duaklir(R) by the FDA;
o Circassia will initially enter a commercial collaboration and
profit share arrangement with AstraZeneca for Tudorza(R) in the
United States. Based on the sales performance of Tudorza(R) in a
twelve month period ending no earlier than 30 September 2018, or if
Duaklir(R) gains FDA approval before 31 December 2019, Circassia
will have the option to secure the remaining commercial rights and
economic benefits of Tudorza(R) in the inhaled administration for
all respiratory indications (the "Field") in the United States (the
"Tudorza(R) Option"). If the Tudorza(R) Option is taken, Circassia
will make further payments to AstraZeneca of up to US$80 million
dependent on the level of Tudorza(R)'s sales within the United
States;
o Circassia intends to fund the deferred and contingent
consideration through third-party financing;
o Circassia will pay royalties to AstraZeneca on sales of
Duaklir(R) in the United States, following potential approval;
and
o Circassia will make R&D contributions of up to US$62.5
million payable to AstraZeneca as deferred payments, which the
Company intends to fund through its returns from the commercial
collaboration and profit share with AstraZeneca.
-- The Transaction structure allows Circassia to accrue the
benefits of a broader product portfolio as well as significant
infrastructure expansion with no funding requirement anticipated
from Circassia shareholders.
-- The Transaction is anticipated to be earnings enhancing for
Circassia after one year and broadly cash neutral for three years,
then cash generative.
Due to its size, the Transaction constitutes a Class 1
transaction for the Company under the Listing Rules and is
therefore subject to the approval of Shareholders. A combined
prospectus and circular containing further details of the proposed
Transaction and containing the notice convening a general meeting
to consider a resolution to approve the Transaction will be sent to
Shareholders as soon as practicable. This summary should be read in
conjunction with the full text of this announcement.
Steve Harris, Chief Executive of Circassia, said:
"This proposed transaction is an ideal fit with Circassia's
strategy and respiratory focus. It represents a transformational
opportunity for the Company, doubling the number of marketed
products in our portfolio, with the potential to triple the current
number within two years. Through an initial commercial
collaboration with AstraZeneca, we plan to double our U.S. sales
force to promote Tudorza(R) as our priority, as well as our
existing NIOX(R) products, transforming Circassia into a
world-class respiratory business positioned for future in-licensing
and M&A. In addition, the transaction structure is highly
attractive, allowing us to fund the consideration without further
investment anticipated from shareholders, while at the same time
welcoming AstraZeneca to our share register."
Mark Mallon, Executive Vice President, Global Product &
Portfolio Strategy at AstraZeneca, said:
"Tudorza and Duaklir are important components of AstraZeneca's
respiratory franchise globally and this collaboration will support
their commercialisation in the US for the benefit of the millions
of COPD patients. It also further sharpens our focus on Symbicort,
Bevespi Aerosphere, benralizumab and other respiratory development
programmes. Circassia will be an important strategic partner for
AstraZeneca in the US and we look forward to working closely
together."
This announcement is released by Circassia Pharmaceuticals plc
and contains inside information for the purpose of Article 7 of the
Market Abuse Regulation (EU) 596/2014 (MAR), encompassing
information relating to the Transaction, and is disclosed in
accordance with the Company's obligations under Article 17 of
MAR.
For the purposes of MAR and Article 2 of the Commission
Implementing Regulation (EU) 2016/1055, this announcement is being
made on behalf of the Company by Julien Cotta, Chief Financial
Officer and Company Secretary.
*Duaklir(R) is a registered trademark in certain European
countries; the U.S. trademark is to be confirmed
Enquiries
Circassia Pharmaceuticals Tel: +44 (0) 1865
plc 405 560
Steve Harris, Chief Executive
Officer
Julien Cotta, Chief Financial
Officer
Rob Budge, Corporate Communications
Numis (Sponsor and Joint Corporate Tel: +44 (0) 20
Broker) 7260 1000
Clare Terlouw
James Taylor
James Black
J.P. Morgan Cazenove (Joint Tel: +44 (0) 20
Corporate Broker) 7742 4000
James Mitford
Chris Cargill
FTI Consulting (PR Adviser) Tel: +44 (0) 20
3727 1000
Ben Atwell
Simon Conway
Mo Noonan
Circassia will host an analyst meeting today at 09.30 GMT. For
further details please contact Mo Noonan on +44 (0)20 3727 1390 or
mo.noonan@fticonsulting.com.
About Circassia
Circassia is a specialty pharmaceutical business with
established commercial infrastructure, marketed products and a
portfolio of particle-engineered treatments targeting major market
opportunities. Circassia sells its novel, market-leading NIOX(R)
asthma management products directly to specialists in the United
States, United Kingdom and Germany. Its products are also promoted
in a number of other countries by the Company's network of
partners.
Circassia's broad-based development pipeline includes a range of
respiratory medicines. The Company's lead asthma treatment,
Fliveo(R), targets substitution of GSK's Flixotide(R) pMDI and is
approved in the UK. Circassia is also developing a direct
substitute for Seretide(R) pMDI, Seriveo(R). In addition, the
Company's pipeline includes a number of inhaled medicines for
chronic obstructive pulmonary disease, including single and
combination dose products. For more information on Circassia please
visit www.circassia.com.
IMPORTANT NOTICE
Forward-looking statements
This announcement, including its Appendix, contains
forward-looking statements, including but not limited to statements
about financial conditions, results of operations and business of
Circassia, Circassia's plans and objectives and the development and
commercialisation of the Products. By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future and therefore are based on current beliefs and expectations
about future events. Forward-looking statements are not guarantees
of future performance and the Group's actual operating results and
financial condition, and the development of the industry in which
it operates may differ materially from those made in or suggested
by the forward-looking statements contained in this announcement.
In addition, even if the Group's operating results, financial
condition and liquidity, and the development of the industry in
which the Group operates are consistent with the forward-looking
statements contained in this announcement, those results or
developments may not be indicative of results or developments in
subsequent periods. Accordingly, prospective investors should not
rely on these forward-looking statements. The Company disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. None of the Company, the Directors or the Sponsor
undertake any obligation nor do they intend to revise or update any
document unless required to do so by applicable law, the Financial
Conduct Authority's (the "FCA's") Prospectus Rules (the "Prospectus
Rules") and the FCA's Disclosure Guidance and Transparency Rules
(the "Disclosure Guidance and Transparency Rules").
This announcement and the information contained in it is
restricted and is not for release, publication or distribution,
directly or indirectly, in whole or in part, in, into or from the
United States (including its territories and possessions, any state
of the United States and the District of Columbia, collectively the
"United States"), Australia, Canada, Japan or South Africa or any
other jurisdiction where to do so might constitute a violation of
local securities laws or regulations (each an "Excluded
Territory"). The information in this announcement may not be
forwarded or distributed to any other person and may not be
reproduced in any manner whatsoever. Any forwarding, distribution,
reproduction, or disclosure of this information in whole or in part
is unauthorised. Failure to comply with this directive may result
in a violation of the Securities Act or the applicable laws of
other jurisdictions.
This announcement is for information purposes only and does not
constitute an offer or invitation to acquire or subscribe for the
Consideration Shares to or by anyone in any Excluded Territory or
to any person to whom it is unlawful to make such offer or
invitation. Any failure to comply with these restrictions may
constitute a violation of the securities laws of such
jurisdictions. Subject to certain exceptions, the securities
referred to herein may not be offered or sold in any Excluded
Territory or to, or for the account or benefit of any national
resident or citizen of any Excluded Territory. This announcement
does not constitute or form part of an offer to sell securities in
the United States. The Consideration Shares have not been and will
not be registered under the Securities Act or under any securities
laws or with any securities regulatory authority of any state or
other jurisdiction of the United States. The Consideration Shares
may not be offered, sold, resold, taken up, transferred, delivered
or distributed, directly or indirectly, into or within the United
States absent registration under the Securities Act or an available
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and in compliance
with any applicable securities laws of any state or other
jurisdiction of the United States. There will be no public offer of
the Consideration Shares in the United States. The Consideration
Shares are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act and no representation is made as
to the availability of the exemption provided by Rule 144 for
resales of any Consideration Shares. Subject to certain exceptions,
no action has been taken by the Company or by the Sponsor that
would permit an offer of the Consideration Shares or possession or
distribution of this announcement in the Excluded Territories or
any other jurisdiction where action for that purpose is required,
other than the United Kingdom. No public offering of the shares
referred to in this announcement is being made.
This announcement has been issued by, and is the sole
responsibility of, the Company. No representation or warranty,
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by the
Sponsor or by any of its respective affiliates or agents as to or
in relation to, the accuracy or completeness of this announcement
or any other written or oral information made available to or
publicly available to any interested party or its advisers, and any
liability therefore is expressly disclaimed.
Numis Securities Limited ("Numis"), which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom,
is acting solely for the Company in relation to the Transaction and
nobody else as a client in relation to the Transaction and will not
be responsible to anyone other than Circassia for providing the
protections afforded to the clients of Numis or for providing
advice in relation to the Transaction.
J.P. Morgan Securities plc (which conducts its UK investment
banking activities under the marketing name, J.P. Morgan Cazenove),
which is authorised in the United Kingdom by the Prudential
Regulation Authority and regulated in the United Kingdom by the
Prudential Regulatory Authority and by the Financial Conduct
Authority, is acting as joint Corporate Broker for Circassia and
for no-one else in connection with the proposed Transaction
referred to in this document and is not, and will not be,
responsible to anyone other than Circassia for providing the
protections afforded to clients of J.P. Morgan Securities plc, nor
for providing advice in connection with any of the matters
described in this document.
Apart from the responsibilities and liabilities, if any, which
may be imposed on the Sponsor by the Financial Service and Markets
Act 2000, as amended, or the regulatory regime established
thereunder, or by the London Stock Exchange or the Listing Rules,
or under the regulatory regime of any jurisdiction where exclusion
of liability under the relevant regulatory regime would be illegal,
void or unenforceable, neither the Sponsor nor any of its
respective affiliates, directors, officers, employees or advisers
accept any responsibility whatsoever for, or makes any
representation or warranty, express or implied, as to the contents
of this announcement, including its accuracy or completeness, or
for any other statement made or purported to be made by it, or on
behalf of it, the Company, the Directors or any other person, in
connection with the Company, the Consideration Shares or the
Transaction, and nothing in this document should be relied upon as
a promise or representation in this respect, whether or not to the
past or future. The Sponsor and its respective affiliates,
directors, officers, employees and advisers accordingly disclaims
to the fullest extent permitted by law all and any responsibility
or liability whatsoever, whether arising in tort, contract or
otherwise (save as referred to above), which it might otherwise
have in respect of this announcement or any such statement.
The distribution of this announcement and the offering of the
Consideration Shares in certain jurisdictions other than the United
Kingdom may be restricted by law.
Statements contained in this announcement regarding past trends
or activities should not be taken as a representation that such
trends or activities will continue in the future.
No statement in this announcement is or is intended to be a
profit forecast or profit estimate or to imply that the earnings of
the Company for the current or future financial years will
necessarily match or exceed the historical or published earnings of
the Company. The price of shares and the income from them may go
down as well as up and investors may not get back the full amount
invested on disposal of the shares.
The Consideration Shares to be issued pursuant to the
Transaction will not be admitted to trading on any stock exchange
other than on the main market for listed securities operated by the
London Stock Exchange.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this announcement.
Proposed collaboration and securing of certain U.S. commercial
rights to Tudorza(R) and Duaklir(R) from AstraZeneca
1. Introduction
The Company today announces that it has reached agreement with
AstraZeneca to enter into a collaboration and secure certain U.S.
commercial rights to two chronic obstructive pulmonary disease
(COPD) products, Tudorza(R) and Duaklir(R), for a maximum total
consideration of US$230 million, plus future sales based royalties
upon the commercialisation of Duaklir(R) in the United States
following potential approval.
Tudorza(R) is a long-acting muscarinic antagonist (LAMA)
indicated for the long-term, maintenance treatment of bronchospasm
associated with COPD, including chronic bronchitis and emphysema.
It was initially approved in the United States in 2012. It is
authorised in 60 countries around the world under a range of brand
names. AstraZeneca revenues related to worldwide sales of
Tudorza(R) were US$170 million in 2016, of which US$80 million was
in the United States.
Duaklir(R) is a long-acting muscarinic antagonist / long-acting
beta agonist combination (LAMA / LABA) in late-stage development in
the United States as a maintenance bronchodilator treatment to
relieve symptoms in adult patients with COPD. It was initially
approved in the European Union in 2014 and is currently in a
clinical phase III study and a phase IIb dose confirmation study in
the United States. It is approved in approximately 50 countries
around the world under a range of brand names. It is not currently
commercialised in the United States, and AstraZeneca revenues
related to Duaklir(R) (and aclidinium/formoterol combination) sales
outside of the United States were US$63 million in 2016. Both
products are presented as a dry powder for inhalation, deliverable
via a breath-actuated multi-dose dry powder inhaler, Pressair(R)
(the "Pressair(R) Device").
The Transaction provides an opportunity to transform Circassia's
product portfolio and commercial presence. The Products represent a
clear strategic fit with Circassia's focus on respiratory medicines
and will leverage and enhance Circassia's commercial
infrastructure. In addition to broadening Circassia's product
portfolio, the Transaction will support the immediate expansion of
Circassia's commercial infrastructure in the United States,
positioning the Company for future product acquisition and
in-licensing opportunities.
The Transaction structure allows Circassia to accrue the
benefits of a broader product portfolio by adding one revenue
generating product (Tudorza(R)) and one product in phase III
development in the United States (Duaklir(R)), as well as
significant infrastructure expansion with no funding requirement
anticipated from Shareholders.
Due to its size, the Transaction constitutes a Class 1
transaction for the Company under the Listing Rules and is
therefore subject to the approval of Shareholders by ordinary
resolution (the "Resolution"). A combined prospectus and circular
containing further details of the Transaction and containing the
notice convening a general meeting to consider the Resolution (the
"General Meeting"), will be sent to Shareholders as soon as
practicable.
Circassia has also received irrevocable undertakings from
certain Shareholders, being Invesco, Woodford Investment Management
Limited and Touchstone Innovations, to vote in favour of the
Resolution in respect of 181,185,112 Ordinary Shares in aggregate,
representing approximately 63.6 per cent. of Circassia's existing
issued ordinary share capital.
2. The Transaction
Circassia proposes to enter into a collaboration with
AstraZeneca and secure certain US commercial rights in respect of
the Products. The Transaction comprises a number of stages and
amounts of consideration payable by Circassia at certain dates, up
to a maximum amount of US$230 million, plus future sales based
royalties upon the commercialisation of Duaklir(R) in the United
States, following potential approval. As detailed below, the
precise amount of the consideration will be dependent on the sales
achieved by Tudorza(R) and will be paid over a period of
approximately two and half years, excluding ongoing royalty
payments on Duaklir(R) sales following potential approval.
Under the terms of the Transaction, it is proposed that
Circassia will secure the rights to:
(a) collaborate with AstraZeneca on the commercialisation of
Tudorza(R) in the United States (the Collaboration) until the
earlier of: (i) Circassia exercising and completing an option to
secure the commercial rights to Tudorza(R) in the Field in the
United States; and (ii) 31 December 2022 (the "Collaboration
Term"). During the Collaboration Term, Circassia will undertake the
marketing and promotion of Tudorza(R) and, as part of this,
Circassia will expand its existing U.S. commercial infrastructure
significantly. AstraZeneca will continue to book sales, manufacture
and supply Tudorza(R). These costs will be funded from the revenues
of the Tudorza(R) collaboration and Circassia and AstraZeneca will
share the remaining operating profits from the Tudorza(R)
collaboration on an equal basis (the "Collaboration Profit
Share");
(b) the Tudorza(R) Option, being an option to secure the
exclusive commercial rights to Tudorza(R) in the inhaled
administration for all respiratory indications in the United
States, subject to: (i) Duaklir(R) having been approved in the
United States no later than 31 December 2019; or (ii) net sales of
Tudorza(R) in the United States in the 12 month period ending on 30
September 2018, 31 December 2018 or 31 March 2019 are greater than
US$45 million; and
(c) an exclusive sub-licence to commercialise Duaklir(R) (the "Duaklir(R) Licence").
The consideration payable by Circassia pursuant to the terms of
the Transaction will be structured as follows (together, the "Total
Consideration"):
(a) on Completion, Circassia will issue Consideration Shares
with an equivalent value of US$50 million to AstraZeneca (the
"Initial Consideration");
(b) Circassia will pay AstraZeneca an amount of deferred
non-contingent consideration of US$100 million on the earlier of:
(i) 30 June 2019; and (ii) the approval of Duaklir(R) by the
FDA;
(c) should Circassia exercise the Tudorza(R) Option for the
exclusive U.S. commercial rights to Tudorza(R) in the Field ahead
of approval of Duaklir(R) by the FDA: (i) Circassia will make a
further payment to AstraZeneca of between US$5 million and US$16
million; and (ii) Circassia will make a payment to AstraZeneca of
between US$20 million and US$64 million upon the approval of
Duaklir(R) by the FDA; with both payments dependent on the level of
Tudorza(R)'s sales within the United States during the
Collaboration Term; and
(d) upon the commercialisation of Duaklir(R), Circassia will pay
AstraZeneca sales-based royalties, which will rise to an
industry-standard rate.
Circassia intends to utilise its returns from the Collaboration
Profit Share to fund a contribution to research and development
activities carried out by AstraZeneca in respect of the Products
under the terms of the Transaction, with such contribution being
capped at a maximum amount of US$62.5 million, invoiced as incurred
by AstraZeneca in the ongoing trials and payable as deferred
payments.
Circassia intends to fund the Deferred Consideration and
Contingent Consideration through third party financing. In the
event that Circassia is not able to procure third party financing
at the time the relevant element of the Deferred Consideration
and/or Contingent Consideration becomes payable, any amount not
paid shall be deemed to be a loan from AstraZeneca for the
outstanding portion of Deferred Consideration and/or Contingent
Consideration (as applicable). The loan will be secured, interest
bearing, and fully repayable in no more than 36 months.
The Board believes that this Transaction structure is attractive
because it permits the majority of the Total Consideration to be
deferred, with the precise level of Total Consideration ultimately
payable dependent on the approval of Duaklir(R) by the FDA and
successful commercialisation of the Products.
In addition, under the Transaction Structure, the Board would
welcome AstraZeneca as a shareholder.
3. Background to and strategic rationale for the Transaction
The Directors believe there is a strong strategic, commercial
and financial rationale for the Transaction. The Transaction has
the potential to rapidly accelerate Circassia's strategy to build a
world-class specialty pharmaceutical company with a strong
commercial infrastructure, marketed products and pipeline of
therapies targeting major market opportunities.
The Directors believe that the Transaction will significantly
assist Circassia in progressing its strategy by:
(a) entering a collaboration and profit share arrangement with
AstraZeneca for Tudorza(R) in the United States;
(b) broadening its portfolio of commercial products by adding
Tudorza(R), for which AstraZeneca revenues related to its sales
currently total approximately US$80 million in the United
States;
(c) adding to its pipeline the phase III product Duaklir(R), in
relation to which AstraZeneca has stated it aims to make an NDA
filing during the first half of 2018 with the possibility of
receiving FDA approval by the end of the first half of 2019.
Duaklir(R) has been approved in the European Union and a number of
other countries and AstraZeneca revenues related to sales outside
of the United States totalled US$63 million in 2016;
(d) expanding its U.S. commercial infrastructure by
approximately doubling its U.S. sales force by the end of July
2017, which Circassia anticipates funding by revenues generated
through the Collaboration with AstraZeneca; and
(e) enhancing Circassia's position as an attractive
commercialisation partner, positioning the Company for future
acquisition and collaboration opportunities and exploiting
Circassia's specialist expertise and presence in the United
States.
4. Summary information on the Products
Products
Tudorza(R) and Duaklir(R) are inhaled respiratory products for
the treatment of COPD. Tudorza(R) has been approved and marketed in
the United States since 2012. Duaklir(R) is approved and marketed
in the European Union and a number of additional rest of the world
countries, and is subject to two on-going clinical trials to
support a planned NDA application by AstraZeneca to the FDA in the
United States. Both products are presented as a dry powder for
inhalation and are delivered via a breath-actuated multi-dose dry
powder inhaler, Pressair(R). The Pressair(R) Device is marketed in
some countries under the trade name Genuair(R).
COPD is a broad diagnosis including emphysema and chronic
bronchitis. The COPD market is large and growing, and the
prevalence and burden of COPD is projected to increase over the
coming decade due to continued exposure to risk factors giving rise
to COPD and aging of the world's population. Current estimates
suggest the global market size will total more than US$13 billion
by 2022.
U.S. COPD Market
Both Products target the COPD market in the United States, which
was estimated to be worth more than US$5 billion in 2016. The
Directors believe that the COPD market offers a major opportunity
because, as noted above, the prevalence of COPD is expected to rise
over the next 30 years and the treatment market is expanding.
Approximately 15.7 million adults in the United States report that
they have been diagnosed with COPD. It is estimated that several
million more adults have undiagnosed COPD. COPD is responsible for
over 120,000 deaths per year in the United States making it the
third leading cause of death in the United States.
COPD Treatment Guidelines
The Global Initiative for Chronic Obstructive Lung Disease
("GOLD"), which comprises a number of leading agencies, including
the United States' National Heart, Lung and Blood Institute and
National Institutes of Health and the World Health Organisation,
has recently released its "2017 Global Strategy for the Diagnosis,
Management and Prevention of COPD" (the "2017 GOLD Report"). This
sets out guidelines for the treatment of COPD. Prior to the
publication of the 2017 GOLD Report, LABA and inhaled
corticosteroid (ICS) containing products were considered
recommended first line therapies for the majority of patients. In
the 2017 GOLD Report, however, this is no longer the case and LAMA
and/or LABA/LAMA products are now acknowledged as the preferred
treatment regimen for many COPD patients because of the benefits
such products provide in terms of symptom relief and reduction in
exacerbation risk. In addition, ICS monotherapies and ICS / LABA
combinations are no longer recommended as preferred initial
treatments in any patient group. Consequently, the GOLD treatment
guidelines support a market move towards LAMA containing
treatments, which encompasses both Tudorza(R) (a LAMA monotherapy)
and Duaklir(R) (a LABA/LAMA combination therapy), if approved.
US LAMA and LAMA / LABA market
The LAMA and LAMA / LABA market in the United States is large
and growing, with current sales estimated to total more than US$2
billion. As the recommendations set out in the 2017 GOLD Report
support an increased use of LAMA-based products, and Tudorza(R) and
Duaklir(R) have compelling value propositions, the Transaction
presents a major commercial opportunity for Circassia.
As a LAMA monotherapy, Tudorza(R) is one of the recommended
first line treatments for a large proportion of COPD patients. In
addition to the therapeutic benefits offered by the LAMA class,
Tudorza(R) provides 24-hour bronchodilation, which provides
patients with significant night time and early morning symptom
control.
Duaklir(R) is a LAMA/LABA combination product, which has the
potential to offer a number of benefits derived from its LAMA
component. Additionally, it has the potential to offer
straightforward treatment escalation (and de-escalation) for
patients treated with Tudorza(R), due to the products' common LAMA
component, identical dosing regimens and patient preferred
Pressair(R) Device used by both products.
Tudorza(R)
Tudorza(R) (aclidinium bromide 400 <MU>g twice daily) is
supported by a broad clinical database, including three pivotal
phase III studies, three one-year long term safety studies and a
head-to-head comparison with the market-leading LAMA, Spiriva(R)
(tiotropium bromide 18 <MU>g once a day).
These studies demonstrate that Tudorza(R) provides statistically
and clinically significant improvements in: (i) trough and peak
forced expiratory volume in one second (FEV(1) ), breathlessness,
exercise tolerance, physical activity and health status compared to
placebo. It also reduces the risk of COPD exacerbations and the
need for rescue medication use, and has placebo like
anticholinergic side-effects that are typically associated with the
LAMA class. The product also significantly improves COPD symptom
severity during the daytime, early morning and night time, and due
to its rapid onset of action provides bronchodilation from the
first dose, which is sustained over long-term treatment.
A comparison versus Spiriva(R) Handihaler(R) shows that
Tudorza(R) offers a number of benefits. The results of the
comparison show that while both products significantly improved
lung function (FEV(1) ) versus placebo at all time points over 24
hours, Tudorza(R) offers significantly greater improvements versus
Spiriva(R) during the night time, which follows the evening dose of
aclidinium that provides additional and sustained bronchodilation.
Additionally, Tudorza(R) provided significant improvements in early
morning symptom severity versus both Spiriva(R) and placebo, with
significant differences from baseline score in symptoms such as
phlegm, shortness of breath, wheeze and cough. The data also showed
a significant reduction in night-time symptom severity from
baseline in Tudorza(R) treated patients versus both placebo and
Spiriva(R). Additionally, Tudorza(R) showed a significant
improvement in activity limitation from baseline versus the other
groups.
Duaklir(R)
Duaklir(R) is an orally inhaled fixed dose LAMA / LABA
combination containing 400 ug aclidinium bromide and 12 ug
formoterol fumarate. It is administered twice daily, once in the
morning and once in the evening. The clinical development programme
on which the product was approved in the European Union and other
countries outside the United States included approximately 4,000
COPD patients, with a number of phase III studies complemented by
long term safety studies. Duaklir(R) is not currently
commercialised in the United States, and is undergoing two clinical
trials designed to support a planned NDA filing by AstraZeneca to
the FDA.
The previously completed studies show that Duaklir(R) provided
consistently significant and clinically meaningful improvements in
lung function (FEV(1) ) and symptom reduction compared with placebo
and the product's individual components. The rate of moderate or
severe exacerbations was also significantly reduced compared to
placebo. Duaklir(R) also provided clinically meaningful
bronchodilation within five minutes of the first dose, which was
maintained over the dosing interval, with a sustained
bronchodilator effect shown in both six month and one-year
studies.
Additionally, Duaklir(R) provided a clinically meaningful and
statistically significant improvement in breathlessness compared
with placebo and its constituent components. It also improved daily
symptoms of COPD such as 'chest symptoms', 'cough and sputum' as
well as overall night-time symptoms, overall early morning symptoms
and limitation of early morning activities compared to placebo and
its aclidinium and formoterol components. A phase III study
demonstrated that Duaklir(R) significantly improved patients'
disease-specific health status (St George's Respiratory
Questionnaire), while a pooled efficacy analysis demonstrated that
Duaklir(R) offered a statistically significant reduction in the
rate of moderate or severe exacerbations compared to placebo, and a
statistically significantly delayed time to first moderate or
severe exacerbation.
Additionally, a comparison study versus leading ICS / LABA
product Seretide(R) (fluticasone/salmeterol) showed that Duaklir(R)
provided significantly improved FEV(1) , with fewer pneumonia and
treatment-related adverse events, versus the comparator.
The Pressair(R) Device
Both Tudorza(R) and Duaklir(R) are delivered by the Pressair(R)
Device, which offers significant advantages over other COPD drug
delivery devices. In addition, studies demonstrate a clear patient
preference for the Pressair(R) Device versus a number of competing
products, including the Handihaler(R) device, which is used to
deliver the market leading LAMA-containing product, Spiriva(R).
The Pressair(R) Device's advantages make it potentially best in
class. It has fewer actuation steps than many other COPD
medications on the market, and has a simple process to prime the
device to deliver the medication. After removing the protective
mouthpiece cap, the patient simply presses and releases the
coloured button on top of the device to dispense a single dose. A
'trigger mechanism' prevents another dose being released until
there has been a successful inhalation, thereby preventing
accidental overdosing. There is also a unique combination of
in-built patient feedback mechanisms that indicate (i) whether the
Pressair(R) Device is ready to use; (ii) if a correct inhalation
has been performed via an audible click and coloured window; and
(iii) the remaining doses. The device also includes a lock-out
mechanism that prevents further use after the final dose has been
dispensed. It also does not require cleaning throughout its in-use
life.
5. Commercial Plan for the Products
The Board believes that Tudorza(R)'s recent commercial
performance can be maintained and potentially enhanced with focused
commercialisation efforts.
Following Completion of the Transaction, Circassia will be
responsible for Tudorza(R) sales and marketing efforts in the
United States, and the Company intends to make the product its lead
priority in terms of promotional activities, with NIOX(R) in second
position.
Circassia plans to implement a robust plan to focus promotion on
Tudorza(R). To implement this plan, Circassia intends to increase
its United States field sales force to approximately 200 full time
representatives by the end of July 2017 to support Tudorza(R)
commercialisation initially, and in due course Duaklir(R), if
approved.
Circassia intends to first focus its promotional efforts on the
highest Tudorza(R) prescribing physician group, in order to
maintain 2016 levels of sales as a basis for future growth. As a
result, Circassia intends to target the physicians who currently
account for eighty per cent. of Tudorza(R) prescriptions, despite
making up just thirty two per cent. of those who prescribe the
product. In addition, Circassia intends to target additional
potential prescribers who are not currently Tudorza(R) customers.
As a result, the Company plans to target the physicians who account
for forty per cent. of non-Tudorza(R) COPD prescriptions. Circassia
believes that by providing highly targeted, focused resources it
will be able to significantly increase the level and intensity of
one-one sales calls where the product benefits can be explained to
the target physician in detail. This activity will also serve to
establish the prescribing base for future sales of Duaklir(R),
following potential approval.
Circassia intends to initiate contact with target physicians as
soon as possible following the Completion Date, and plans to use
existing AstraZeneca marketing materials, training and data to
ensure continuity of Tudorza(R) branding.
Circassia anticipates that while it will have a strong focus on
Tudorza(R) promotion following Completion of the Transaction, the
Company will also continue to advance its NIOX(R) business. The
Company's sales force will continue to target allergists to promote
NIOX(R) products, which will comprise nearly thirty per cent. of
its commercial focus. It will also promote NIOX(R) to its
Tudorza(R) and COPD target physicians.
Overall, the Board believes the Transaction offers a highly
attractive commercial opportunity for Circassia. The combination of
recent changes to the GOLD guidelines supporting the broader use of
LAMA-containing treatments, the compelling product benefits offered
by Tudorza(R) and Duaklir(R) (following potential approval) and the
Company's focused commercialisation plan, provides a strong
foundation to capture a proportion of a large and growing
market.
6. Financial impact of the Transaction
The Directors believe that both the Transaction and the
Transaction structure offer significant benefits to Circassia.
The Transaction adds to Circassia's portfolio the marketed
product Tudorza(R), for which AstraZeneca revenues related to its
U.S. sales were US$80 million in the year ended 31 December 2016.
Third-party estimates suggest the product may achieve peak U.S.
sales of over US$90 million. The Transaction also includes rights
to commercialise the late-stage product Duaklir(R), which has the
potential for approval and launch in H1 2019, and has third party
projected potential peak U.S. sales of over US$180 million.
Additionally, following Completion, Circassia expects to rapidly
expand its U.S. sales force to approximately 200 by the end of July
2017, which it anticipates funding through the collaboration with
AstraZeneca.
On Completion, the Directors believe that the Enlarged Business
will be fully funded to deliver on its plans, including the
development of its broader product portfolio. Overall, the
Transaction is expected to be broadly operating cashflow neutral
for the first three years and then cash generative. The Transaction
is expected to be earnings enhancing within one year.
7. Current trading and prospects
The Directors believe that the Transaction will complement
Circassia's existing speciality respiratory business, which
continues to make progress. As announced at Circassia's interim
results in September 2016, Circassia's NIOX(R) products have
performed strongly, and the Directors confirm that full year 2016
revenues are expected to be broadly in line with analyst
expectations. In addition, Circassia's cash balance at the end of
2016 is also expected to be broadly in line with analyst
expectations.
During 2016, Circassia continued to build and grow its
commercial presence to further increase NIOX(R) revenues. During
the year, Circassia significantly expanded its U.S. sales team and
at the end of 2016 launched a direct sales force in the United
Kingdom. Circassia has also conducted two NIOX(R) clinical studies
designed to extend its existing registrations, to include children
aged four to six years old in the United States and the diagnosis
of primary ciliary dyskensia in Europe. The studies are now
successfully completed, with positive results received from
both.
Circassia has also progressed its portfolio of
particle-engineered respiratory products, which continue to
advance. Its lead asthma treatment, Fliveo(R), which targets direct
substitution of GSK's Flixotide(R) pMDI, is currently approved in
the United Kingdom and is licensed to a partner in key markets,
including the European Union. During the second half of 2016,
Circassia initiated negotiations for the return of the product
rights in the European Union, which are ongoing. In 2016, Circassia
initiated a pharmacokinetic study of its Seriveo(R) product, which
is also ongoing with final results expected in the coming weeks.
Following the addition of three new early-stage COPD products to
Circassia's portfolio in 2016, including a potential direct
substitute for the market leading LAMA product Spiriva(R), early
development activities are continuing. As a result, Circassia's
product targeting substitution of Spiriva(R) is in preparation to
enter a pharmacokinetic study in the next 12 months.
Since June 2016, Circassia has taken robust measures to curtail
costs relating to its allergy portfolio, and subsequently to drive
efficiencies across its entire business. As set out in the Interim
Results in September 2016, following the receipt of disappointing
cat SPIRE phase III results Circassia has taken a prudent approach
to its allergy immunotherapies, halting late-stage development work
on grass and ragweed allergy products and rationalising its allergy
R&D team. Circassia has also now reviewed and rationalised its
structure and cost base across its wider business. Circassia is
continuing a large-scale HDM SPIRE study, which was already well
advanced, and expects results in Spring 2017, when it will have the
opportunity to reassess its wider allergy portfolio if these
clinical data are compellingly positive.
8. Principal terms and conditions of the Transaction
As noted above, it is proposed that the Total Consideration
payable by Circassia will be a combination of Consideration Shares
and cash (or, in certain circumstances interest bearing short-term
debt).
An application will be made by Circassia to the UK Listing
Authority for the Consideration Shares to be admitted to the
premium listing segment of the Official List and to the London
Stock Exchange for the Consideration Shares to be admitted to
trading on its main market for listed securities. The decisions in
respect of Admission are at the discretion of the UK Listing
Authority and the London Stock Exchange.
The Transaction is conditional on the following, among other
matters:
-- the Resolution being passed at the General Meeting (or at any adjournment thereof);
-- the issuance and delivery of an independent valuation report
in relation to the Consideration Shares, as required by section 593
of the Companies Act 2006; and
-- any HSR Act statutory waiting periods having lapsed.
9. Consideration Shares and dilution
The Consideration Shares will be issued as fully paid and will
rank pari passu in all respects with the existing Ordinary Shares
in issue at the time the Consideration Shares are issued pursuant
to the Transaction, including in relation to any dividends or
distributions with a record date falling after the issue of the
Consideration Shares.
The number of Consideration Shares to be issued in order to
satisfy the Initial Consideration will be determined pursuant to
the terms of the Development and Commercialisation Agreement prior
to the Completion Date and will be calculated based on the lower of
the weighted average share price over the 20 trading days prior to:
(i) 16 March 2017, being US$1.0558454 (the Signing VWAP); and (ii)
the completion of the Transaction, subject to a maximum of
62,407,169 Consideration Shares. The exchange rate used for the
purposes of calculating the number of Consideration Shares to be
issued will be a 20 day weighted rate corresponding to the measures
described at (i) and (ii) above.
On the basis that the applicable share price for determining the
number of Consideration Shares to be issued is the Signing VWAP,
Circassia would be required to issue 47,355,417 Consideration
Shares to AstraZeneca. This would result in Circassia's issued
ordinary share capital increasing by approximately 16.6 per cent.
As a result, existing Circassia Shareholders would be subject to an
immediate dilution, and following the issue of the Consideration
Shares they would hold approximately 85.7 per cent. of the issued
ordinary share capital of Circassia.
10. Expected timetable to Completion
A Prospectus containing further details of the proposed
Transaction and containing the notice convening a general meeting,
will be sent to Circassia shareholders as soon as practicable.
Completion of the proposed Transaction ("Completion") is expected
to occur early in Q2 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCJRMFTMBIBMMR
(END) Dow Jones Newswires
March 17, 2017 03:00 ET (07:00 GMT)
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