QualityStocks News - InSite Vision and Merck Subsidiary Amend Payment Terms of AzaSite License

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Companies sign deal amending payment terms, enabling InSite Vision to meet note holder obligations.

...we thank them for their ongoing commitment to the commercial success of AzaSite in North America...

QualityStocks would like to highlight InSite Vision, a publicly traded company advancing new ophthalmologic products for unmet eye care needs. The company’s product portfolio utilizes InSite Vision’s proven DuraSite® bioadhesive polymer core technology, an innovative platform that extends the duration of drug retention on the surface of the eye, thereby reducing frequency of treatment and improving the efficacy of topically delivered drugs. The DuraSite platform is currently leveraged in two commercial products for the treatment of bacterial eye infections, AzaSite® (azithromycin ophthalmic solution) 1%, marketed in the U.S. by Merck, and Besivance®(besifloxacin ophthalmic suspension) 0.6%, marketed by Bausch + Lomb. InSite Vision’s clinical-stage ophthalmic product pipeline includes AzaSite Plus™ and DexaSite™ for the treatment of eye infections, BromSite™ for pain and inflammation associated with ocular surgery, and ISV-101 for the treatment of dry eye disease.

In the company’s news yesterday,

InSite Vision announced that Merck & Co. Inc., via subsidiary Inspire Pharmaceuticals Inc., has agreed to amend the payment terms of the companies’ AzaSite® 1% license agreement, payable on a quarterly basis.

Per the agreement, Merck will pay InSite the higher of the pro-rata annual minimum royalty or the earned royalty for 2012 and 2013; the minimum royalties due to InSite for 2012 total $12 million. Minimum royalties for 2013 are $19 million, or $4.75 million per quarter.

Merck also will pay InSite a catch-up payment of about $7.2 million for the difference between the earned royalty already paid for the fourth quarter of 2011 and the first and second quarters of 2012, and the pro-rata annual minimum royalties for those quarters. InSite expects to receive minimum royalties of $4.25 million for the fourth quarter of 2012.

InSite said it will use the royalty payments received in August to pay all current and deferred interest on its AzaSite secured notes and to make a principal payment on the notes of about $4.9 million.

“We applaud Merck’s willingness to amend our license agreement, and we thank them for their ongoing commitment to the commercial success of AzaSite in North America,” Timothy Ruane, InSite’s CEO stated in the press release. “With this quarterly restructuring of the minimum royalty obligation, InSite Vision will be able to meet its quarterly obligations to its Note Holders through Q3 2013, and thus continue to collaborate with Merck in their ongoing efforts to bring AzaSite to the patients who seek relief from bacterial conjunctivitis.”

In 2007, InSite entered into an agreement with Inspire Pharmaceuticals (which was acquired by Merck in May 2011) to commercialize AzaSite in North America. Per that agreement, InSite is eligible to receive payments of 25 percent on net sales, as well as minimum royalty payments that increase yearly through 2013.

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This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Risks and uncertainties applicable to the company and its business could cause the company's actual results to differ materially from those indicated in any forward-looking statements.

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