Sunovion Pharmaceuticals to Acquire Elevation Pharmaceuticals

San Diego’s Elevation Pharmaceuticals has agreed to be acquired by Sunovion Pharmaceuticals of Marlborough, MA (formerly Sepracor) in a deal worth up to $430 million. With the acquisition, Sunovion secures Phase 2b product candidate EP-101, an inhaled medication to open the air passages of the lungs and ease breathing of patients with emphysema and chronic bronchitis.

Elevation Pharmaceuticals was founded in 2008 and had raised a total of $44 million in two rounds of funding. Investors include Canaan Partners, Novo Ventures, TPG Biotech, Care Capital and Mesa Verde Venture Partners.

The announcement is below:

Sunovion Pharmaceuticals Inc. (Sunovion) today announced that it has signed a definitive agreement (“Agreement”) to acquire Elevation Pharmaceuticals, Inc. (Elevation), a privately held biopharmaceutical company specializing in the development of new aerosol therapies for patients with respiratory diseases. The acquisition includes Elevation Pharmaceuticals’ EP-101 product, an inhalation solution of a long-acting muscarinic antagonist (LAMA) bronchodilator that is in Phase 2b clinical trials for the treatment of patients with moderate to severe chronic obstructive pulmonary disease (COPD).

According to the terms of the agreement, Sunovion will make an upfront payment of US$100 million to the shareholders of Elevation on closing of the acquisition of its shares, and thereafter it will make development milestone payments for EP-101 up to US$90 million. Furthermore, after the regulatory approval, Sunovion will also make commercial milestone payments up to US$210 million. Subsequent milestone payments up to $30 million could occur contingent upon the successive development of additional new programs.

“The acquisition of Elevation Pharmaceuticals will further strengthen and diversify our respiratory pipeline and portfolio, and enable Sunovion to continue to meet the needs of people living with respiratory diseases and the healthcare providers who treat them,” said Hiroshi Nomura, Vice Chair of Sunovion Pharmaceuticals Inc.

“Nebulized medicine is an important treatment option for older and sicker patients — the fastest growing segment within COPD,” observes Bill Gerhart, Founder and CEO of Elevation Pharmaceuticals. “Sunovion is the ideal sponsor to realize our original vision to significantly elevate the standard of care for this underserved patient population.”

The boards of both Sunovion and Elevation have approved the transaction and Agreement; however the acquisition is subject to customary closing conditions.

About EP-101

EP-101 is a proprietary solution formulation of glycopyrrolate, delivered by a customized eFlow(R) Nebulizer System (originated by and licensed from PARI Pharma GmbH), which was developed to optimize medication delivery and allow ease of use. Daily administration of inhaled bronchodilators (including LABAs and LAMAs) and corticosteroids are the main therapeutic options for managing the symptoms of COPD. EP-101 was designed for patients who are not well controlled on current standard of care or who prefer a nebulizer. The novel delivery system was designed to offer two potential key features for patients: reduced time for administration for patients (<2 min vs. 5-10 min for standard jet nebulizer) and a more portable size with a reduced noise level than most current nebulizer devices. Two Phase 2 studies have been conducted, and an additional Phase 2 study will be conducted this year on EP-101 to evaluate its efficacy and safety in patients with moderate to severe COPD. Phase 3 trials are expected to initiate in the second half of 2013.

“EP-101 is currently the only LAMA in late stage development in nebulized form, providing a significant opportunity to address the needs of patients struggling with the control of their COPD using handheld inhalers,” added Nomura. “With our extensive expertise in successfully launching and commercializing nebulized respiratory treatments, we have the knowledge and infrastructure necessary to complete the development of this important medication.”

About Sunovion Pharmaceuticals Inc. (Sunovion)

Sunovion is a leading pharmaceutical company dedicated to discovering, developing and commercializing therapeutic products that advance the science of medicine in the central nervous system (CNS) and respiratory disease areas and improve the lives of patients and their families. Sunovion’s drug development program, together with its corporate development and licensing efforts, has yielded a portfolio of pharmaceutical products including LATUDA(R) (lurasidone HCl), LUNESTA(R) (eszopiclone), XOPENEX(R) (levalbuterol HCl) Inhalation Solution, XOPENEX HFA(R) (levalbuterol tartrate) inhalation aerosol, BROVANA(R) (arformoterol tartrate) inhalation solution, OMNARIS(R) (ciclesonide) nasal spray, ZETONNA(TM) (ciclesonide) nasal aerosol and ALVESCO(R) (ciclesonide) HFA inhalation aerosol.