KV Pharmaceutical Company has entered into an agreement with California-based Vivus, Inc. for the purchase of US marketing rights to EvaMist, a novel new estrogen transdermal spray that has been developed to deliver estradiol in a convenient easy-to-use dosage form for the treatment of vasomotor symptoms associated with menopause.
Under the terms of the all-cash transaction, KV agreed to pay $10 million at closing and to make an additional payment of approximately $140 million at the time of final approval from the FDA. There are also two, one-time milestone payments tied to the net sales of the product. $10 million will be paid if the product achieves $100 million in net sales in a market year and up to $20 million will be paid if the product achieves $200 million in net sales in a market year.
Upon approval, EvaMist is expected to significantly augment the women's health offerings of KV's branded subsidiary, Ther-Rx Corporation. With a PDUFA action date from the US Food and Drug Administration of July 29, 2007, KV currently expects that the product may be approved and launched during the second half of its fiscal 2008 which begins April 1, 2007.
EvaMist is a small, hand-held, simple-to-use transdermal spray that is designed to provide an easy and convenient means to deliver a preset dose of estradiol via the skin. EvaMist is placed gently against the skin and an actuator button is pushed, releasing a light transdermal spray containing a proprietary formulation of estradiol. Estradiol is released into the blood stream on a sustained basis over 24 hours. EvaMist is fast-drying, non-irritating and invisible after application.
EvaMist was formulated with the patented metered-dose transdermal system (MDTS) which is designed to deliver a once-daily dose resulting in low systemic exposure to estradiol and its metabolites.
EvaMist, which has completed Phase III clinical trials, is a patented estradiol transdermal spray that offers a novel approach to the treatment of vasomotor symptoms associated with menopause. The product targets an annual $1.3 billion estrogen replacement market (Source: IMS NSP Audit, January 2006-December 2006) where physicians and patients are seeking an effective and safe, low-dose estrogen product. The Company estimates EvaMist's US market potential to be approximately $125 million in peak, annual net sales with gross margins consistent with those currently being achieved by Ther-Rx Corporation. KV believes EvaMist will offer therapeutic effectiveness with estradiol dosing that is among the lowest available for this indication in a manner that is also cosmetically appealing for women.
Marc S. Hermelin, KV's Chairman of the Board and Chief Executive Officer stated, "EvaMist is a great strategic fit with our Ther-Rx women's health franchise, an area in which we are devoting significant R&D resources to expand our footprint. EvaMist targets a new and compelling market for Ther-Rx with great growth potential, menopause, with an innovatively delivered drug that can also help promote patient compliance. Upon approval, we will be able to leverage the promotion of this product through our current branded sales force, focusing on the specific targets of OB/GYN and select Primary Care Physicians that write for estrogen replacement therapy. EvaMist has the potential to be one of Ther-Rx's largest products in terms of revenue."
"KV, with its strong women's health franchise, is the ideal company to maximize EvaMist's potential in the US," said Leland F. Wilson, President and chief executive officer for Vivus. "If approved, EvaMist will provide an important new treatment option for women suffering with the symptoms of menopause, and we are exceedingly pleased to be able to have a company such as KV, with an exceptional infrastructure already in place to quickly bring the benefits of EvaMist to patients."
EvaMist is expected to be the first transdermal spray ERT product approved for use in the US and will be manufactured and supplied to KV by a third party. The ERT market is large with 1.5 million women in the United States entering menopause each year and 75% of those women reporting symptoms. Women naturally enter into menopause usually between the ages of 45 and 55; however, surgical menopause may happen at any age.
KV will expense the initial $10 million payment in the fourth quarter of fiscal 2007 in accordance with GAAP accounting rules as in-process research and development related to the acquisition of this product. Depending on the timing of approval, launch, and anticipated investments in pre-launch activities, this transaction could have a break-even or slightly dilutive effect on KV's fiscal 2008 results of operations, but is expected to be accretive thereafter.
The agreement is subject to customary closing conditions including a review by the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Pending completion of certain conditions the agreement should close by mid-2007.
KV Pharmaceutical Company is a fully integrated specialty pharmaceutical company that develops, manufactures and markets and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products.
Vivus, Inc. is a pharmaceutical company dedicated to the development and commercialization of next-generation therapeutic products addressing obesity and sexual health. Vivus has three products that are positioned to enter Phase 3 clinical trials, and one product currently under NDA review by the FDA.