LEO Pharma has entered into a definitive agreement to acquire US biopharma company Timber Pharmaceuticals in a deal worth up to $36m.
The transaction will give LEO access to Timber’s lead investigational product candidate, TMB-001, a topical reformulation of isotretinoin to treat the rare skin disease congenital ichthyosis.
There are currently no approved prescription therapies available to treat the condition.
Isotretinoin is an active pharmaceutical ingredient (API) that currently only exists as an oral formulation in the US. The reformulation of the API, TMB-001, has shown positive results in its phase 2 clinical trial, with phase 3 recruitment currently ongoing in the US and Europe.
Under the terms of the agreement, LEO will pay an upfront consideration of $14m to Timber, and up to $22m in contingent value rights (CVRs) payable upon achievement of certain milestones.
The CVRs payment will include specific milestones from Timber’s TMB-001: up to £12m related to its US Food and Drug Administration approval by October 2025, and up to £10m related to its first achievement in net sales exceeding $100m within four consecutive calendar quarters by the end of 2028.
LEO is expected to pay a total of $2.62 per share, based on approximately 3.4 million shares of Timber’s common stock and restricted stock issued and outstanding as of August 2023.
John Koconis, chairman and chief executive officer of Timber, said: “We are very pleased to deliver a transaction that will maximise long term value for Timber Pharmaceuticals’ shareholders.”
He added: “We believe that LEO has the potential to establish TMB-001 as the standard of care in the treatment of congenital ichthyosis.”
Christophe Bourdon, chief executive officer at LEO, said: “We will add an asset [TMB-001] with promising outlook to be able to help patients suffering from a debilitating disease that today have no proper treatment options.”
The deal is subject to certain closing conditions, including, but not limited to, Timber Pharmaceuticals’ shareholder approval, which is expected in the fourth quarter of 2023.