Opko’s Purchase of Schering-Plough’s Rolapitant Assets Only Cost $2 Million; Deal Back-End Loaded

As a condition to receiving FTC clearance to complete the reverse merger in the United States, Schering-Plough agreed to divest a part of its cancer research candidates program, so that the same would not be automatically shelved, by potentially-competing research programs, then underway at Merck. The buyer of those Schering-Plough assets was Opko Health. Specifically, Opko purchased Schering-Plough’s Neurokinin Receptor Antagonist Research programs, the lead candidate of which is Rolapitant.

In an SEC Form 10-Q filed today, Opko disclosed (at pages 17 and 18) that it agreed to pay only $2 million at closing for the assets; but may potentially pay another $27 million, if various research milestones are acheived. In other words, Opko got a great deal:

. . . .On October 12, 2009, we entered into an asset purchase agreement (the “Schering Agreement”) with Schering-Plough Corporation (“Schering”) to acquire assets relating to Schering’s neurokinin-1 (“NK-1”) receptor antagonist program. Under the terms of the Schering Agreement, we will pay Schering $2 million in cash upon closing and up to an additional $27 million upon certain development milestones. Rolapitant, the lead product in the NK-1 program, recently completed Phase II clinical testing for prevention of nausea and vomiting related to cancer chemotherapy and surgery, and other indications. Phase I clinical testing has also been initiated for a second compound in the same class. . . . .

For a cancer compound in very late-stage Phase II trials, $2 million is a stone-cold steal. $29 million, all in (if all milestones are met) — is a still an extremely handsome bargain. Word.