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Jazz Pharmaceuticals to Buy Rights to Defibrotide, Shares Up

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Jazz Pharmaceuticals’ (JAZZ) shares climbed 6.97% after the company announced that it has entered into an agreement to acquire the rights to defibrotide from Sigma-Tau Pharmaceuticals, Inc. The deal is expected to close in the third quarter of 2014.

Sigma-Tau held the rights to defibrotide on the basis of an agreement with Gentium, which was acquired by Jazz Pharma earlier this year.

Jazz Pharma markets defibrotide in Europe under the brand name Defitelio for the treatment of severe hepatic veno-occlusive disease (VOD) in patients over one month of age undergoing hematopoietic stem cell transplantation therapy. The company is working with the FDA on a regulatory pathway for defibrotide as a treatment for severe VOD with a potential new drug application (:NDA) submission planned for the first half of 2015.

Terms of the Agreement

As per the terms of the agreement, Jazz Pharma will acquire rights to defibrotide in all countries in the Americas including the U.S. from Sigma-Tau. In return, Jazz Pharma will make an upfront payment of $75 million. Apart from that, Sigma-Tau will receive milestone payments of up to $25 million from Jazz Pharma once the FDA accepts defibrotide’s NDA for the VOD indication and up to $150 million based on the timing of FDA approval.

Our Take

With this agreement, Jazz Pharma will secure remaining worldwide rights to defibrotide. The company launched Defitelio in some EU countries (including Germany, Austria and the UK) with launches expected to continue over the rest of this year and the next. We are positive on the Sigma-Tau deal. Defibrotide is expected to be synergistic with its Jazz Pharma’s cancer drug, Erwinaze’s sales force.

Defibrotide enjoys fast track designation for the VOD indication in the U.S. and orphan drug status in both the U.S. and the EU for the treatment and prevention of VOD.

Jazz Pharma holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector include Actelion Ltd. (ALIOF), Biogen Idec Inc. (BIIB) and ANI Pharmaceuticals, Inc. (ANIP). All these stocks hold a Zacks Rank #1 (Strong Buy).

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