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Business

Cipla sells Chase Pharma stake to Allergan

MUMBAI (NewsRise) - Cipla's U.K. unit has sold its stake in Chase Pharmaceuticals, a U.S.-based company developing a drug to treat Alzheimer's disease, to Allergan.

Cipla (EU) held a 16.7% stake in Chase via a syndicated venture investment. In 2014, Mumbai-based Cipla invested $1.5 million to snap up a 14.6% stake in Chase through the syndicate to finance the initial phases of clinical trials for the company's drug CPC 201 to treat Alzheimer's disease.

In March, the company made an additional investment of $3 million to fulfill an obligation under the agreement terms. The other investors in the syndicate were Edmond de Rothschild Investment Partners and New Rhein Healthcare.

Under the deal, Allergan has agreed to pay $125 million upfront, along with potential regulatory and commercial milestones of up to $875 million to the shareholders of Chase, the company said in a statement.

The milestone payments are related to Chase's lead compound CPC-201 that has shown to improve cognition in Alzheimer's disease patients, and certain backup compounds, Allergan said in a separate statement. The company plans to advance CPC-201 into a phase three registration study next year.

Chase has closed over $24 million in funding till date, with about $22 million through a financing round led by New Rhein Healthcare, Edmond de Rothschild, Cipla UK and Brain Trust Accelerator Fund.

For Cipla, the divestment comes at a time when the company is looking to spruce up its business in the domestic market. Cipla, which earns nearly 40% of its revenue from India, said in September it plans to draw $1 billion in revenue from home.

The company has stepped up efforts to launch drugs in respiratory, dermatology, cardiovascular and urology to speed up its India growth.

Further, Cipla has also been investing heavily to expand its exposure to the U.S., the largest drug market in the world, from where barely a fifth of its revenue comes. Last year, the company agreed to acquire U.S.-based InvaGen Pharmaceutical and Exelan Pharmaceuticals, at an enterprise value of $550 million.

Shares of Cipla gained 0.45% in Mumbai trading, while the benchmark S&P BSE Sensex closed 0.35% higher.

--Dhanya Ann Thoppil

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