U.S. arm of Sun Pharma's Taro buys Zalicus Pharmaceuticals of Canada

The acquisition of Canada's Zalicus Pharmaceuticals by a U.S. subsidiary of India's largest drugmaker, Sun Pharmaceuticals, is being seen as a move to strengthen its proprietary drug focus and expand beyond dermatology treatments, according to a report in India's Economic Times.

The U.S. arm of Israel-based Taro Pharmaceuticals bought Zalicus for $3.8 million in cash and a $3.8 million limited recourse note that matures in 2017. Sun controls Taro after a series of complex negotiations that began in 2007 and reached a conclusion in 2013.

Zalicus, a subsidiary of Boston-based Epirus Biopharmaceuticals, which develops biosimilar drugs, is developing a pain management drug candidate called Z944. Z944 is said to have completed Phase I trials and is close to entering Phase II trials, the newspaper reported.

If Taro further develops Z944 and repays the promissory note, Epirus said it will be entitled to an additional payment of $7.5 million, which could reach $30 million if certain regulatory filings and other milestones are achieved. Taro also agreed to pay a mid-single-digit percentage royalty if the product is commercialized globally, the Economic Times reported.

In August, Taro received FDA approval in the U.S. for Keveyis, a drug used to treat periodic paralysis. Analysts have forecast the drug may bring in $650 million, the newspaper reported. In August, Taro reported net income for Q2 of $104 million and said it made $215 million in net sales.

- here's the story from the Economic Times