Jazz (JAZZ) Acquires Cavion, Adds Movement Disorder Candidate

Jazz Pharmaceuticals plc (NASDAQ:JAZZ) has acquired private biotech, Cavion, Inc, thereby adding a movement disorder candidate to its pipeline for an upfront payment of $52.5 million.

With this acquisition, Jazz gains worldwide rights to Cavion’s lead pipeline candidate, CX-8998 – a modulator of T-type calcium channels. Cavion has completed a phase II study on CX-8998 as a potential treatment for essential tremor, a prevalent and disabling movement disorder. Data from the study demonstrated proof-of-concept and supports further development of CX-8998 in the indication. Jazz is planning to continue the development of the candidate in this indication and a phase II study is planned for 2020.

Per the terms of the agreement, the deal represents a total consideration of $312.5 million including the upfront payment and $260 million in potential clinical, regulatory and commercial milestones.

Cavion is also evaluating CX-8998 in another phase II for treating absence epilepsy. Pre-clinical data showed that CX-8998 is superior to current standard-of-care for absence epilepsy.

Cavion is focused on developing first-in-class therapies for a range of neurological and rare genetic diseases by restoring the brain's natural rhythms through modulation of the T-type calcium channel.

Jazz’s shares have increased 10.3% so far this year compared with the industry’s rise of 8.5%.

The Cavion acquisition is the second deal inked by Jazz in a span of nearly a month and the third deal in 2019 to boost its pipeline. In July, Jazz acquired an early-stage oncology asset from London-based Redx Pharma.

The company has a strong sleep disorder portfolio with two approved drugs — Xyrem and Sunosi. Narcolepsy drug, Xyrem already has blockbuster status. Its demand remains strong, which drives sales every quarter. Sunosi was approved in February and launched in July in the United States. The company is also developing a low sodium formulation of Xyrem as a follow-on drug. However, Xyrem is nearing patent expiration and generic competition for the major revenue generator is expected to start from 2023. Without diversification of portfolio or successful development of a follow-on drug for Xyrem, Jazz may lose significant revenues after 2023. Currently, Xyrem faces competition from Teva Pharma’s (NYSE:TEVA) Provigil and Novartis’ (NYSE:NVS) Ritalin-SR. Avadel Pharmaceuticals (NASDAQ:AVDL) is also developing a narcolepsy candidate.

Jazz has a history of diversifying or strengthening its pipeline/portfolio through acquisitions or collaborations. In January 2019, Jazz collaborated with Codiak BioSciences to develop and commercialize exosome therapeutics to treat cancer. The company added leukemia drug, Vyxeos to its portfolio with the acquisition of Celator in 2016. Moreover, recently approved sleep drug, Sunosi, was acquired from Aerial BioPharma in 2014.

Zacks Rank

Jazz currently has Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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