Avanir Pharmaceuticals announced that it has completed the sale of currently marketed, antipsychotic drug FazaClo (clozapine, USP) to Azur Pharma, a specialty pharmaceutical company headquartered in Ireland. Upon close of the transaction Avanir received an upfront payment of $42 million, plus an additional $1.9 million in working capital adjustments.

Under the terms of the agreement, previously announced on July 3, 2007, Avanir could receive up to an additional $10 million in payments in 2009 contingent upon certain regulatory conditions, and up to $2 million in royalties, based on 3 per cent of annualized net product revenues in excess of $17 million.

Avanir has allocated $11 million in payments to pay down a portion of its outstanding debt, which will be reflected on the company's balance sheet for the year ending September 30, 2007. The company believes that the net payments from the sale of FazaClo, plus the cash, cash equivalents and unrestricted investments in securities at June 30, 2007 will be sufficient to finance operating expenses through the end of the next fiscal year, including the initiation of the planned confirmatory Phase III clinical trial of Zenvia in patients with involuntary emotional expression disorder (IEED), otherwise known as pseudobulbar affect (PBA).

"The rapid close of this transaction is a testament to our team's ability to execute on our strategic objective of becoming a late-stage, clinical development company dedicated to improving treatments for central nervous system conditions," said Keith Katkin, Avanir's president and CEO. "We remain focused on the clinical development of our core asset, Zenvia, where we believe we can generate the most shareholder value."

Also under terms of the agreement, Azur Pharma has assumed Avanir's future earn-out obligations to the prior owner of Alamo Pharmaceuticals payable upon the achievement of certain sales milestones after the closing of the transaction. AVANIR will finalize the transfer of FazaClo business operations to Azur Pharma in the coming months.