Retrophin Turns Asklepion Voucher Into $245M Sanofi Payday

Xconomy New York — 

File this one under shrewd dealmaking: Less than three months after buying a small drugmaker in Baltimore, MD, Retrophin has already made its money back—and then some.

New York- and San Diego, CA-based Retrophin (NASDAQ: RTRX) this morning sold what’s known as a priority review voucher to French drugmaker Sanofi in a deal worth $245 million. Sanofi will pay Retrophin $150 million up front, and then two additional $47.5 million installments in 2016 and 2017.

What makes the transaction significant for Retrophin is that it’s already recouped the money it spent acquiring Asklepion Pharmaceuticals in March—on top of the FDA-approved drug that came as part of the deal. Retrophin exercised an option to buy the Baltimore company for $28.4 million in cash, 661,279 shares of Retrophin stock, and another $42.2 million in future payments, according to a recent SEC filing.

In return, Retrophin got three key things: the voucher; cholic acid (Cholbam), a treatment Asklepion developed for ultra-rare bile acid synthesis and peroxisomal disorders; and $40 million in deferred tax liabilities.

These vouchers have become hot commodities. They’re awarded to companies that bring treatments to market for neglected tropical diseases and rare pediatric ailments, and enable a swifter a review from the FDA once a company files for approval of a drug. That can cut months out of a review process, potentially adding millions in revenue for a company, or give a drugmaker a leg up over a competitor with a rival therapy. They can also be used for any drug in a company’s pipeline, and be flipped like any other asset—the way Retrophin did today.

What’s more, Retrophin has gotten the highest price yet paid for these vouchers. Gilead Sciences (NASDAQ: GILD) bought a voucher from Canada’s Knight Pharmaceuticals in November for $125 million. Regeneron Pharmaceuticals (NASDAQ: REGN) got one from BioMarin Pharmaceutical (NASDAQ: BMRN) for $67.5 million before that.

Retrophin’s shares surged more than 30 percent when it bought Asklepion in March. Shares were up another 8 percent pre-market this morning after news broke of the voucher sale.

Retrophin has been reshaping itself in the wake of its split from former CEO Martin Shkreli. Now led by CEO Stephen Aselage, the company divested some assets earlier this year and is now built around development candidates for a rare kidney disorder called focal segmental glomeruloscerosis and pantothenate kinase-associated neurodegeneration, a life-threatening neurological disorder; two products for kidney stones and gallstones; and cholic acid.