Theratechnologies and EMD Serono sign collaboration and licensing agreement

Under the terms of the agreement, Theratechnologies will receive an upfront payment of $30 million which includes a license fee of $22 million and an equity investment of $8 million in Theratechnologies common stock at a price of $3.67 per share by Merck KGaA, providing Merck KGaA a 3.6% ownership in Theratechnologies.

Theratechnologies may receive up to $215 million in total payments, including the upfront payment, and payments based on the achievement of certain development, regulatory and sales milestones. Theratechnologies will be entitled to receive increasing royalties on annual net sales of tesamorelin in the US.

Theratechnologies will be responsible for conducting R&D for additional indications. EMD Serono will have the option to co-develop and commercialize additional indications for tesamorelin in the US. EMD Serono will equally share in the development costs related to such additional indications if it exercises its option. Theratechnologies will, in such case, also have the right, subject to EMD Serono’s agreement, to opt to co-promote such additional indications.

Consummation of this transaction is subject to customary closing conditions and notification to, and regulatory review by, the US Federal Trade Commission and US Department of Justice under the US Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), and the expiration of certain statutory waiting periods under the HSR Act. The transaction is expected to close in December 2008.

Tesamorelin is a growth hormone-releasing factor analogue with therapeutic potential in a variety of anabolic and lipolytic indications and is in the final stages of its second Phase III clinical trial to assess the safety and efficacy when used to reduce visceral adipose tissue in HIV patients with lipodystrophy.