UK drugmaker Vernalis has killed off its agreement with equity fund Paul Capital Healthcare to regain 100% of the royalty stream from Menarini’s sales of its migraine drug Frova.
Back in 2008 Vernalis signed a deal with PCH giving up 90% of the payments it would have received from European commercialisation partner Menarini for Frova (frovatriptan) in return for a cash injection of 18.4 million euros, to help it weather a particularly difficult time.
But following a one-off payment of $32.57 million to PCH, which also subscribed for and was granted 2.1 million warrants over Vernalis Ordinary Shares, the company has bought back 100% of the rights, meaning that from the start of this year it will pocket 25.25% of Menarini’s sales of the drug, which is generating European revenues approaching £3 million a year.
“This is a further important step in re-building shareholder value for Vernalis,” said the group’s chief executive Ian Garland commenting on the move, which he said will enable the firm to “become debt free, regain a sustainable income stream and extend our cash runway beyond 2012”.
