Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of developmental-stage biopharma Eagle Pharmaceuticals (EGRX -4.61%) jumped by 15% Tuesday morning on robust volume after the company announced a licensing deal with generic drugmaker Teva Pharmaceutical Industries Ltd. (TEVA)
Per the press release, Teva will license Eagle's experimental bendamustine short infusion time treatment, EP-3102, for chronic lymphocytic leukemia, or CLL, and indolent B-cell non-Hodgkin lymphoma, or NHL. EP-3102 is a rival formulation to Teva's branded drug Treanda and is currently under review with the Food and Drug Administration.
Although the FDA previously granted EP-3102 Orphan Drug status for both indications, Teva plans to waive these designations to bring the drug to market faster, if it is approved.
So what: Small-cap Eagle will receive $30 million via an upfront payment from Teva and, potentially, another $90 million in milestone payments. If and when the drug hits the market, Eagle will also be eligible to book double-digit royalties from net sales of EP-3102.
Another key aspect of this licensing deal is that the company won't have to invest heavily in the drug's commercialization, which would almost certainly involve a massive secondary offering.
Tuesday's news also resolves the outstanding litigation between these two companies over one of CLL and NHL drug Treanda's key patents.
Now what: Under the terms of the agreement, Teva will be responsible for the drug's commercialization within the U.S., while Eagle still has the responsibility of completing the regulatory review process and conducting any post-approval studies. Although no drug's regulatory pathway should be considered a slam dunk by any stretch, Teva's involvement suggests that EP-3102 has a better than average chance. As such, Eagle looks like an interesting name to keep track of going forward.
