Aziyo Biologics, Inc. is finally gaining some traction. The company was formed in November 2015 by HighCape Partners, a growth equity fund focused on commercial-stage life sciences companies. Deerfield Management Co. joined HighCape in providing capital for the transaction. Aziyo develops customized tissue products for use in orthopedic, spinal, sports medicine, and dermal applications.
On May 31, 2017, the company announced the completion of an asset purchase agreement with CorMatrix® Cardiovascular, Inc. for the purchase of all CorMatrix commercial assets and related intellectual property. CorMatrix develops biomaterial devices that harness the body’s own innate ability to repair damaged cardiovascular tissues.
The CorMatrix platform includes natural tissue products derived from porcine extracellular matrix for cardiac and vascular repair, as well as CanGaroo®, a biomaterial pouch that secures cardiovascular implantable devices such as pacemakers and defibrillators. The price was not disclosed, and the deal adds five commercially marketed products, a xenogeneic platform and 50 employees to Aziyo’s business. Aziyo plans to expand the CanGaroo platform into new indications, invest in additional clinical studies to demonstrate the benefits of this biologic implantable device and grow its sales force.
Concurrently, Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) will receive $10 million from a contractually specified royalty rate buy-down following CorMatrix’ sale of the rights to its pericardial repair and CanGaroo® Envelope extracellular matrix (ECM) products to Aziyo Biologics. In May 2016, Ligand acquired the rights to royalties on these products, as well as several pipeline ECM programs from CorMatrix for $17.5 million.
Under the terms of the original transaction, Ligand was entitled to a $10 million payment if, upon acquisition, the new owner elected to buy-down the royalty rate. As a result of this transaction, Ligand will receive a 5% royalty on these commercial products from Aziyo, down from the original 20% royalty with CorMatrix.
As part of the royalty rate reduction, Aziyo has agreed to pay Ligand up to $10 million of additional sales-based milestones tied to the commercial success of the currently-marketed products and to extend the term on these royalties by one year.
