Commercial rights acquired from AIT Therapeutics
This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014
Circassia to Acquire US and Chinese Commercialisation Rights to Novel Nitric Oxide Product AirNOvent from AIT Therapeutics Inc.
Oxford, UK - 24 January 2019: Circassia Pharmaceuticals plc ("Circassia" or "the Company"; LSE: CIR), a specialty pharmaceutical company focused on respiratory disease, today announces it has entered into a definitive agreement to acquire the exclusive commercialisation rights from AIT Therapeutics Inc. ("AIT") to its ventilator compatible nitric oxide product, AirNOvent*, in the United States and China. The rights cover all potential indications in the hospital setting for the administration of inhaled nitric oxide at up to 80 parts per million, which includes hypoxic respiratory failure associated with persistent pulmonary hypertension of the newborn (PPHN). AIT anticipates applying to the US Food and Drug Administration (FDA) for Premarket Approval (PMA) for AirNOvent in Q2 2019 for use in the treatment of PPHN, and the Company anticipates launching the product in the first half of 2020, once approved. Subsequently, AIT plans to seek a label extension for the product's use in a related indication.
Under the terms of the agreement, Circassia will pay AIT initial consideration of $7.35 million. Further deferred contingent consideration will be payable upon certain milestones, including $3.15 million on successful completion of a pre-submission FDA meeting, $12.6 million on the sooner of the product's US launch in PPHN or 90 days post FDA approval, $8.4 million on the US approval of the related indication and $1.05 million on the product's launch in China. In addition, the Company will pay tiered royalty payments based on gross profits from future sales of the product. Circassia intends to satisfy the initial consideration, and currently anticipates satisfying the contingent consideration, through the issuance of new Ordinary Shares in the Company to AIT.
Steve Harris, Circassia's CEO, said: "Acquiring the US and Chinese commercialisation rights to the innovative product AirNOvent represents an important milestone in Circassia's strategic transformation into a commercially-focused respiratory pharmaceutical business. With our commercial platform established in the United States and our rapid expansion in China nearing completion, we look forward to leveraging our infrastructure to commercialise this novel product, once approved. In the coming months we anticipate significant progress across our business, as we take full commercial control of Tudorza® in the United States, the FDA completes its review of Duaklir®'s NDA and AIT submits AirNOvent for approval. As a result, we look forward to 2019 with great optimism."
About AirNOvent
AirNOvent is a portable system that utilises an electric voltage to produce precise quantities of nitric oxide (NO) from the nitrogen and oxygen in air. It uses disposable smart filters to remove unwanted NO2 produced during the process.
Inhaled nitric oxide is a pulmonary vasodilator, which is approved in the United States for use as part of a regimen in the treatment of hypoxic respiratory failure associated with persistent pulmonary hypertension of the newborn. Approvals in a number of other territories, including Europe, also include the use of inhaled nitric oxide as part of the treatment of pulmonary hypertension associated with cardiac surgery. In the United States, only one inhaled nitric oxide product is currently available, INOMAX®. It is used in neonatal intensive care units (NICUs) and its delivery system administers nitric oxide from pressurised cylinders in conjunction with ventilator systems. The product generated estimated US revenues of over $400 million in 2017.
AIT's AirNOvent offers a number of potential benefits over the existing competition. It is cylinder-free and is smaller, significantly lighter and more convenient than the INOMAX system. It is designed for compatibility with current ventilators, and unlike the INOMAX system does not require special storage and handling. As a result, it has the potential for use by NICUs, as well as smaller clinics without the facilities required to manage nitric oxide cylinders.
AirNOvent is protected by US patents. Development of the core nitric oxide generator is complete, the delivery system is in the finalisation stage of development and the product will be produced by specialist third-party manufacturers. Under the companies' agreement, AIT will remain responsible for the product's development, US regulatory filings and manufacture, with Circassia managing the regulatory process in China. The FDA has confirmed a PMA regulatory route for AirNOvent and AIT anticipates submitting an application for an initial indication in hypoxic respiratory failure associated with PPHN in Q2 2019. The FDA typically completes its review of a PMA within 180 days of accepting the filing, and consequently the Company anticipates launching the product in the first half of 2020, once approved.
Commercialisation plans
Circassia plans to leverage its existing commercial platform in the United States to launch and promote AirNOvent, once approved. The Company plans to add a modest number of personnel to its field force, including additional key accounts and medical affairs experts, to target top hospitals with NICUs, many of which are already called on by the Company's existing device sales team, as well as units that do not currently use inhaled nitric oxide. The field force will be supported by the Company's commercial operations, marketing, training, technical support and customer experience teams, which are already in place. With over 55% of babies born in the US with hypoxic respiratory failure treated with INOMAX, Circassia plans to target unmet clinical need, including facilities that currently do not use inhaled nitric oxide such as those without the appropriate handling facilities. Following installation of the system, the Company plans to generate ongoing revenues from the supply of disposable smart filters.
About persistent pulmonary hypertension of the newborn
Persistent pulmonary hypertension of the newborn (PPHN) is defined as the failure of normal circulatory transition after birth. It is characterised by marked pulmonary hypertension that causes hypoxemia secondary to right-to-left extrapulmonary shunting of deoxygenated blood. PPHN is reported to occur in 0.4 - 6.8 per 1,000 live births (approximately 1,500 - 26,200 newborns) in the United States, and despite modern treatment the mortality rate remains approximately 10% in those with moderate to severe forms of the condition. Management of the condition can be complex involving a number of treatments, which in addition to supplemental oxygen can include the administration of inhaled nitric oxide.
Key transaction terms
Under the terms of the companies' agreement, AIT grants Circassia an exclusive license for the commercialisation of AIT's nitric oxide generator and delivery system for use at concentrations of ≤ 80 ppm in the hospital setting in the United States and China. AIT will receive contingent payments based upon the achievement of certain milestones, which Circassia currently anticipates satisfying through the issuance of new Ordinary Shares in the Company, at a discount of 5% to a volume weighted average share price.
· $7.35 million payable immediately
· $3.15 million payable upon successful completion of a pre-submission meeting with FDA
· $12.6 million payable upon the sooner of the product's US launch in PPHN or 90 days post FDA approval
· $8.4 million payable upon label expansion in a related indication in the US
· $1.05 million payable on launch in China.
In addition, AIT will receive royalties from Circassia based upon gross profits on future sales of the product:
· 5% on the first $50 million in cumulative gross profit in the US
· 5% on the first $20 million in cumulative gross profit in China;
and thereafter:
· 15% on annual gross profit of up to and including $100 million (US and China combined)
· 20% on annual gross profit in excess of $100 million (US and China combined).
About Circassia
Circassia is a world-class specialty pharmaceutical business focused on respiratory disease. Circassia sells its novel, market-leading NIOX® asthma management products directly to specialists in the United States, United Kingdom and Germany, and in a wide range of other countries through its network of partners. In 2017, the Company established a commercial collaboration with AstraZeneca in the United States in which it promotes the chronic obstructive pulmonary disease (COPD) treatment Tudorza®. The Company also has the commercial rights to NDA-stage COPD product Duaklir®, and following the exercise of its option anticipates taking full commercial control of Tudorza® in the US in 2019. For more information please visit www.circassia.com.
About AIT Therapeutics Inc.
AIT Therapeutics Inc. is a clinical-stage medical device and biopharmaceutical company using nitric oxide (NO) to treat respiratory and other diseases. The Company is currently applying its therapeutic expertise to treat lower respiratory tract infections that are not effectively addressed with current standards of care, as well as pulmonary hypertension, in various settings. AIT is currently advancing its revolutionary NO Generator and Delivery System in clinical trials for the treatment of bronchiolitis and severe lung infections such as nontuberculous mycobacteria (NTM). For more information, visit www.ait-pharm.com.
Application for listing and total voting rights
Application has been made to the Financial Conduct Authority for admission of 12,300,971 new Ordinary Shares, in respect of the upfront consideration payable to AIT, to the premium listing segment of the Official List and to the London Stock Exchange for admission to trading on the London Stock Exchange's main market for listed securities (together, "Admission"). Admission of the new Ordinary Shares is expected to occur at 8.00 a.m. on 25 January. The new Ordinary Shares will, when issued, be credited as fully paid and will be issued subject to the Company's articles of association and will rank pari passu in all respects with the existing issued Ordinary Shares in the capital of the Company, including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares by reference to a record date falling after their issue.
Following the issue of the new Ordinary Shares, the Company's issued share capital will comprise 369,587,405 ordinary shares of 0.08p each. The total number of voting rights in the Company following the issue of the new Ordinary Shares will be 369,587,405. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority.
*AirNOvent is not an approved name for the product and may not be the final name submitted for approval
This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014. The person who arranged for the release of this announcement on behalf of Circassia was Julien Cotta, Chief Financial Officer.
Contacts
Circassia
Steve Harris, Chief Executive Officer Tel: +44 (0) 1865 405 560
Julien Cotta, Chief Financial Officer
Rob Budge, Corporate Communications
Peel Hunt
James Steel / Dr Christopher Golden Tel: +44 (0) 20 7418 8900
Numis Securities
James Black / Freddie Barnfield Tel: +44 (0) 20 7260 1000
FTI Consulting
Simon Conway / George Kendrick Tel: +44 (0) 20 3727 1000
Forward-looking statements
This press release contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of Circassia. The use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target" or "believe" and similar expressions (or the negatives thereof) are generally intended to identify forward-looking statements. These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Any of the assumptions underlying these forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the forward-looking statements may not actually be achieved. Nothing contained in this press release should be construed as a profit forecast or profit estimate. Investors or other recipients are cautioned not to place undue reliance on any forward-looking statements contained herein. Circassia undertakes no obligation to update or revise (publicly or otherwise) any forward-looking statement, whether as a result of new information, future events or other circumstances.
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