April 24 (Reuters) - U.S. biopharmaceutical company Hyperion Therapeutics said on Thursday it agreed to buy Israel's Andromeda Biotech, a developer of a new diabetes drug, in a deal that could be worth close to $600 million.
Andromeda is a subsidiary of Clal Biotechnology Industries . At the closing, expected this quarter, Hyperion will pay $12.5 million in cash and nearly 313,000 shares of Hyperion stock - valued at $7.85 million, it said.
Hyperion would make milestone payments of $120 million, the first of which would not be made until acceptance of the first marketing application filing for review in either the United States or Europe.
Andromeda is developing DiaPep277, a treatment for Type I diabetes. DiaPep277 is currently undergoing a second advanced Phase III clinical study, with results expected in the first quarter of 2015.
Once the drug hits annual global sales of $450 million, Hyperion would pay up to $430 million in commercial milestones. It would also pay as much as 17 percent in contingent sales for annual worldwide sales above $1.2 billion, Hyperion said.
"The acquisition of Andromeda Biotech is a transformative event for Hyperion," said Donald Santel, chief executive of Hyperion. "We believe DiaPep277 has the potential to become a highly differentiated, first-in-class medicine for an orphan indication with a significant unmet need."
Hyperion already sells Ravicti, a drug that helps those with urea cycle disorder - used to rid the body of ammonia.
"DiaPep277 adds an attractive late-stage asset to our portfolio," Santel said.
The boards of both companies have approved the deal.
Hyperion said its headcount would rise by 10 employees once the deal is competed.
In February, Clal Biotech - a unit of Clal Industries - said Andromeda was in talks to be sold to an American pharmaceutical company. (Reporting by Steven Scheer)