BioMarin Buys Rights to Long-Delayed La Jolla Drug

BioMarin Pharmaceuticals(BMRN) is taking out a cheap call option on a long-shot lupus treatment.

The company announced late Tuesday that it has licensed worldwide commercial rights to Riquent, an experimental lupus drug from La Jolla Pharmaceuticals(LJPC) currently enrolling patients in a pivotal phase III study.

BioMarin is paying next to nothing for the rights to Riquent, at least up front, which probably reflects the trouble La Jolla has had over the years with the drug. The U.S. Food and Drug Administration refused to approve Riquent in 2004, asking La Jolla to conduct another phase III study. That study is ongoing using a higher Riquent dose, with an interim analysis expected in the current quarter.

La Jolla will receive an upfront payment of $15 million from BioMarin, which will fork over half that amount in cash. BioMarin will also purchase $7.5 million in La Jolla preferred stock convertible to common shares at a price of just over 73 cents a share.

La Jolla shares closed Tuesday at 75 cents a share.

If one of two planned interim analyses of the Riquent study are successful, BioMarin will pay La Jolla up to an additional $47.5 million to $92.5 million. In exchange, BioMarin gets rights to co-market Riquent worldwide excluding Asia, with the two companies splitting profits and losses equally.

"The development history of Riquent has been long and challenging, but we feel the current study addresses the shortcomings of prior studies and provides the best possible opportunity to demonstrate that Riquent reduces the frequency of renal flares in lupus nephritis patients," said BioMarin CEO Jean-Jacque Bienaime, in a statement.