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Opiant Pharma stock nearly doubles on deal by Emergent Bio to buy Adapt Pharma

Acquisition of Adapt Pharma underscores potential for companies in the opioid overdose market
An injection needle.
Opiant Pharmaceuticals is a specialty company developing treatments for addiction and drug overdose.

Shares of Opiant Pharmaceuticals Inc (OTCMKTS:LLTP) shot up nearly 100% after a report that Emergent BioSolutions said it would buy privately-held Adapt Pharma, which markets Narcan, the only FDA approved needle-free emergency opioid overdose treatment.

The deal boosted Opiant because it has a royalty agreement with Adapt Pharma for Narcan, and market players calculate its sales in 2018 could approach US$180mln. Opiant will also get a milestone payment if Narcan sales exceed US$200mln, which is possible in 2019 given the severity of the US opioid epidemic. 

"We have a growing royalty revenue stream from net sales of Narcan Nasal Spray for the treatment of opioid overdose by our commercial partner, Adapt Pharmaceuticals, and our successful development of this product serves to de-risk our robust and advancing pipeline,” Opiant Chief Executive Roger Crystal said in the company's second-quarter report released earlier this month. 

Shares of Opiant rose 7.14% to US$22.96 in premarket action. The stock was up 37.64% on Wednesday to close at US$21.43. The stock closed on Tuesday up 0.13% at US$15.57.

READ: FDA agrees to review Emergent’s new anthrax production facility

Cantor Fitzgerald analyst Brandon Folkes believes Emergent's acquisition of Adapt Pharma underscores the potential for companies addressing the opioid overdose market, such as Opiant.

“We achieved significant sequential growth of over 70% in royalty revenue in the second quarter of 2018,” said Opiant chief financial officer David O’Toole. “These results provide a strong foundation for potential further Narcan  success in the second half of the year.”

In its second-quarter report, Opiant said it received $3.1 million of royalty revenue from the license agreement between Opiant and Adapt for the sale of Narcan. For a period covering six months, the royalty revenue reached US$4.7mln. The company said it had about $US$11.2mln of cash and cash equivalents on hand as of June 30, compared with US$8.1mln at the end of 2017.

Opiant had also recently received the first tranche of US$500,000 from a previously awarded grant of US$7.4mln from the National Institute of Health's for the development of OPNT003, another drug being developed to combat opioid abuse.

Emergent BioSolutions said on Tuesday it paid US$735mln for Adapt, with an upfront payment of US$635mln.

Opiant Pharmaceuticals is a specialty company developing treatments for addiction and drug overdose. It is based in Santa Monica, California.

Emergent is based in Gaithersburg, Maryland. It is a global life sciences company providing specialty products for the civilian and military sectors. 

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