Operator
Good morning, everyone, and thank you for joining the Zevra Therapeutics Corporate Update Call to announce the acquisition of Acer Therapeutics. [Operator Instructions]
Today's call is being recorded and will be made available on the company's website following the conclusion of the call. With that, I'll now turn the call over to Nichol Ochsner, Vice President of Investor Relations and Corporate Communications for Zevra Therapeutics. Thank you. You may begin.
Nichol Ochsner
Good morning, and thank you for joining us today as we discuss Zevra Therapeutics acquisition of Acer Therapeutics. Before we get started, let me take a moment to provide some important information. First, I encourage you to access the webcast slides in the press release, both of which were released this morning and are available in the Investors section of the Zevra website.
Today's discussions will include forward-looking statements. These encompass various topics, including updates on clinical development and regulatory journey of arimoclomol, the advancement of our pipeline programs, time lines for clinical trials, enrollment, initiation, completion and data reporting from our clinical trial.
Forward-looking statements are not promises or guarantees and are subject to risks and uncertainties and other significant factors that may lead to actual results differing materially from projections made. For a comprehensive understanding of these factors, please refer to the Risk Factors section in our annual report for 10-K.
Zevra Therapeutics and Acer Therapeutics, will file relevant materials with the SEC, including a Zevra registration statement on Form S-4, that will include a proxy statement of Acer, and will also constitute a prospectus. Investors and security holders will be able to obtain, without charge, a copy of registration statement, the proxy statement prospectus and other relevant documents filed with the SEC when available from the SEC's website at www.sec.gov.
Our presentation today will include information about OLPRUVA, a product that is approved by the U.S. Food and Drug Administration. We are including the important safety information for this product on these 2 slides.
Now I'm pleased to welcome Zevra's management team members participating in today's call. I'm joined by Christal Mickle, our Co-Founder, Chief Development Officer and Interim Chief Executive Officer; Joshua Schafer, our Chief Commercial Officer and Executive Vice President of Business Development; and LaDuane Clifton, our Chief Financial Officer. With that, I'll turn the call over to Christal Mickle.
Christal M. Mickle
Thanks, Nichol. Good morning, and thank you all for joining us today. This morning, we're pleased to announce that Zevra has entered into a definitive agreement to acquire Acer Therapeutics. We believe there is an excellent strategic fit for our 2 companies, with highly complementary pipeline, expertise and a focus on rare disease indications. Together, we have the opportunity to deliver much needed therapies to the communities we serve, and create value for our shareholders.
Our companies are deeply committed to developing and commercializing treatments for rare diseases and supporting patient communities, who have very limited or no existing therapeutic options. Before I hand the call over to Josh and LaDuane to provide additional details, I'd like to provide you with a summary of the deal consideration and strategic rationale.
Under the terms of the deal, Zevra is acquiring Acer Therapeutics in the stock exchange transaction for $0.61 per share or $15 million of Zevra's common stock, which is approximately a 2% discount to Acer's last closing price. In addition, Acer shareholders will receive contingent value rights or CVRs, of up to $76 million and potential future cash payments, based on achieving future commercial and regulatory milestones, as well as potential payments related to Acer's preclinical program.
In a separate transaction, Zevra has purchased Acer's senior secured debt, at a discount through a capital-efficient structure. Lastly, Zevra will provide a bridge loan facility to Acer of up to $16.5 million, which will support the ongoing commercial efforts for OLPRUVA, while the transaction is being finalized.
Now that the companies have entered into a definitive agreement, the transaction is subject to customary closing conditions, including approval by Acer's stockholders. We believe there is potential for significant value in Acer's portfolio. Zevra will assume commercialization efforts of Acer's OLPRUVA, which was recently approved in the U.S. as an adjunctive therapy for adult and pediatric patients with urea cycle disorders or UCDs, involving deficiencies of certain enzymes.
Acer is also advancing a pipeline of investigational product candidates that can complement Zevra's current pipeline. This includes EDSIVO, a Phase III program for the treatment of vascular Ehlers-Danlos syndrome or VED, which is a rare genetic disorder impacting blood vessels that can give rise to life-threatening cardiovascular events, including aneurysms, arterial dissections and spontaneous vascular ruptures.
As I mentioned in my opening remarks, this transaction is an excellent strategic fit for Zevra, combining 2 complementary pipelines and adding to our expertise in rare diseases. There is meaningful potential to realize synergies by combining the commercial organizations of both companies, including distribution and patient services, existing commercial contracts and supply agreements and data management systems.
The commercial launch of OLPRUVA in the U.S. is highly aligned with the commercialization plan for arimoclomol, Zevra's product candidate for the treatment of Neiman Pick Type C or NPC. Both conditions are often diagnosed in children and treated by metabolic specialist, geneticists, as well as other specialists.
All of these factors are expected to support efficient commercialization for arimoclomol, if approved. With that, I'll turn the call over to Josh, who will provide more information on Acer and the strategic rationale for the merger. Josh?
Joshua Schafer
Thanks, Christal, and good morning, everyone. We're very excited to welcome Acer to the Zevra family. Both companies are focused on developing and delivering of therapies to patients with rare diseases. And the combination of our 2 companies will enhance our collective pipeline and capabilities.
The addition of Acer's OLPRUVA is an opportunity to accelerate Zevra's commercial entry into the rare disease market, while strengthening and diversifying the revenues which we currently receive from the AZSTARYS royalties, as well as the arimoclomol early access program.
The addition of OLPRUVA as well as the Phase III clinical program for EDSIVO, bolster our own promising pipeline, which has several near-term catalysts between now and the end of the year. This includes the resubmission of the arimoclomol NDA in the fourth quarter of this year, the interim Phase II analysis of KP1077 for idiopathic hypersomnia and the potential receipt of the next net sales milestone for AZSTARYS.
In addition, the combination of our 2 portfolios is attractive, because the rare diseases, for which we are developing therapies, specifically urea cycle disorders and Nieman Pick Type C, are oftentimes diagnosed and treated by many of the same medical specialists and in the same centers of excellence. And this will allow for a very focused and effective commercial effort.
The acquisition of Acer, brings OLPRUVA, a nitrogen binding agent, which was recently approved by the FDA as adjunctive therapy for appropriate patients with urea cycle disorders or UCDs. UCDs are a group of rare genetic disorders that results in a deficiency of enzymes responsible for removing harmful ammonia from the bloodstream. Ammonia is formed from the great bound of protein in the body, and in excess of ammonia in the blood can be very damaging and potentially result in neurocognitive impairment or even brain damage, if the ammonia levels are not controlled.
In the U.S., the prevalence of UCD is approximately 2,000 patients with 100 new babies born with UCD each year. Of these prevalent patients, roughly half go undiagnosed and of the approximately 1,100 diagnosed patients with UCD, those who are treated receive some sort of form of phenylbutyrate.
The U.S. market for UCD treatment is valued at approximately $400 million, with phenylbutyrate as the standard of care. Despite the presence of multiple products, there remains a significant need for therapies that overcome the limitations of these current therapies.
Specifically, as till burden, easy and more convenient dosing and the elimination of unpalatable taste and odor. All these challenges can lead to a reduction in adherence and compliance, such as missing rebate dose, and this can, in turn, lead to poor outcomes for patients.
OLPRUVA is a recently FDA-approved novel formulation of phenylbutyrate, designed to overcome these challenges that can lead to portal clients. It has a dual coded power formulation, packaged in a convenient single-dose envelope and it delays the release of the active ingredient for up to 5 minutes when added to water, thereby eliminating the unpalatable taste.
It also has strong intellectual property protection through 2036, which paves the way for multiple opportunities to potentially expand the indication in the label for OLPRUVA and grow the brand. These opportunities include the possibility to enhance administration flexibility and to improve the bioavailability through premium administration. There's also the potential to expand into other indications, such as maple syrup urine disease or other liver disorders.
Turning our attention now to the current treatment landscape. I want to highlight a number of ways that OLPRUVA addresses the need for increased compliance by overcoming the inconvenient administration, odor and bitter taste of other phenylbutyrate formulations.
Phenylbutyrate comes in a variety of forms, including liquid, powder or tablet. Patients are required to take it along with meals, which can make adherence challenging. Other issues include bitter taste and poor palatability, lack of portability and inconvenient dosing and administration and high till burden, all of which can impact patients' adherence and can result in suboptimal control of the plasma ammonia levels.
OLPRUVA is formulated as a dual coded oral pellet that is case linkup to 5 minutes. It dissolves quickly in the acidic environment of the patient's stomach. OLPRUVA is packaged in a single-dose envelope that makes the medicine highly portable and more convenient for the busy patient or family to take it on the go. Drug is mixed with water and mix-aid, [indiscernible] can be easy to administer.
When comparing alternative to other products on the market, OLPRUVA's ease of dosing and the route of administration provides patients and physicians with a strong alternative to other products on the market. As I mentioned, OLPRUVA's unique formulation and individual packaging addresses the pain points of patients, and we believe there is an opportunity to capture significant market share with its innovative product that is palatable, premeasured and portable.
OLPRUVA's ease of dosing and oral administration, provides patients and physicians an effective treatment alternative for this rare disease. We are confident in the potential of OLPRUVA, and we have confidence in our ability to bring this much needed treatment to the appropriate patients with UCDs.
Acer's clinical development pipeline includes EDSIVO, a treatment for vascular Ehlers-Danlos syndrome or vEDS, in patients with a confirmed Type III collagen mutation. Ehlers-Danlos syndrome is an inherited disorder caused by mutations in the genes responsible for the structure, production or processing of collagen.
The spectrum of disorders where patients can present with various forms. The most serious of which is vEDS, which causes abnormal fertility in blood vessels, which can give rise aneurysms, abnormal connections between blood vessels and others, arteriovenous fistulas, arterial dissections and spontaneous vascular ruptures, all of which can be potentially life-threatening. There are an estimated total Type III collagen mutation-positive vEDS patients of approximately 7,500 in the U.S.
Acer's product EDSIVO is in Phase III and starts to reduce the mechanical stress on collagen fibers within the atrial walls, through vascular dilation and smooth muscle relaxation. As I mentioned, the program is in Phase III ongoing trial right now, and is expected to be fully enrolled in 2024.
In addition, we think that the combination of Zevra and Acer's capabilities, will enhance and accelerate our ability to make a deep impact in the rare disease community. Zevra's 2 programs, arimoclomol for NPC and KP1077 for the treatment of idiopathic hypersomnia and narcolepsy continue to advance. An NDA submission for arimoclomol is expected in the fourth quarter of this year, and we're preparing for the commercial launch in the second half of next year, if approved.
The acquisition of Acer and specifically the commercial platform for OLPRUVA, will allow us to accelerate the building of the commercial organization to support both products. The commercialization of OLPRUVA in the U.S. is highly complementary to that of arimoclomol. Both conditions are often diagnosed and treated by metabolic specialists, geneticists and other specialists, many of whom are in the same centers of excellence.
We will be building extensive services and resources to help patients navigate their journey with their disease, and ensure that reimbursement and access to our medicines are in place. We also leverage tools like data management and contracting systems across multiple products.
Importantly, we believe that we can effectively promote and commercialize these products across the targeted treating physicians, with a small and focused commercial and medical team. Zevra is building a rare disease company capable of bringing much-needed therapies to our patients.
Now I'd like to turn it over to LaDuane to provide more details on the deal terms.
R. Clifton
Thank you, Josh. We are very enthusiastic about this important strategic transaction and the potential for value creation that it represents. It's really a series of transactions, which taken together, are designed to add value, to mitigate risk and capture what we hope will become meaningful opportunities to generate shareholder value.
First, in order to support the merger transaction with Acer, we have purchased all of Acer's secured debt from Nantahala Capital Management, for an aggregate purchase price of $28.5 million, paid in $12 million in cash from Zevra's existing margin loan facility, $5 million in a new note, held by Nantahala and $11.5 million of Zevra's common stock or approximately 2.27 million shares, based on a 20-day VWAP as of August 29, 2023.
Strategically, purchasing Acer's secured debt at signing, supports the process to seek approval for the merger transaction, while mitigating Zevra's risk and providing additional security as we move toward the closing.
The second part of this process is the Acer acquisition itself. Under the terms of the definitive agreement, which has been approved by the Boards of Directors of both companies, Zevra intends to acquire Acer Therapeutics with a total deal value of up to $91 million. First, each share of Acer stock will receive $0.61 per share or $15 million of Zevra's common stock in the stock exchange transaction. This represents a discount of approximately 2% compared to Acer's last closing price.
In addition, Acer shareholders will receive CVRs of up to $76 million in potential future cash payments, based on achieving future commercial and regulatory milestones, as well as potential payments related to a specific preclinical program. Zevra has also provided a bridge loan facility of up to $16.5 million, to support the ongoing commercial activities for OLPRUVA, the ongoing EDSIVO Phase III trial and other operating requirements, which would be deployed at Zevra's sole discretion.
The transaction is sub certain customary closing conditions, including, but not limited to, approval by Acer's shareholders. We believe that the potential value that can arise from the merger of Acer with Zevra is substantial, and further, we are levering the strength of our balance sheet in a capital-efficient manner to capture these new opportunities, which includes the ability to increase and diversify our revenues with the addition of approval.
The acquisition of Acer will allow us to continue driving forward our vision to advance promising therapies for patients in need. Together, Zevra and Acer will be a powerful rare disease company, with the capacity and resources to drive growth, and ensure a patient's first approach to developing and commercializing much-needed treatments for the rare disease community.
We have a leadership team with a depth and experience needed to execute our strategic goals, and guide the company through this critical period, ensuring that shareholder and patient interests are aligned. Merging Acer into Zevra is a unique opportunity, where there are significant synergies because of the complementarity of the commercial approach required for both the UCD and NPC indications.
We believe that our commitment to building strong relationships within these patient communities, including with key opinion leaders and specialized treatment centers of excellence, will flow seamlessly into the ongoing commercialization efforts for OLPRUVA.
We also see the potential of expanding our development pipeline with EDSIVO for the treatment of vEDS. This late-stage clinical program represents another opportunity, where Zevra's legacy of product development success, could be instrumental in gaining approval in a therapeutic area where there are currently no approved treatments. And of course, this adds to our already robust pipeline of product candidates, including arimoclomol for the treatment of NPC, for which we expect to resubmit NDA in Q4 of this year, and KP1077, which is being developed for rare sleep disorders, including idiopathic hypersomnia and narcolepsy.
We expect interim data from the ongoing Phase II trial in IH to be available and reported out later this quarter. In addition to these regulatory and development catalysts, we are also pleased with the recent momentum we're seeing with AZSTARYS, our approved product for the treatment of ADHD, which is being commercialized by our partner, Corium Incorporated.
We earned the first net sales milestone of $5 million during Q2 of '23. And based on the current prescription trends, we expect that we will be able to earn the second net sales milestone of $10 million by the end of this year.
Today's announcement of the Acer acquisition is just another example of Zevra continuing to execute on our strategy to become a leading rare disease therapeutics company. As we pursue the expansion of our development pipeline and invest in the growth of our commercial capabilities, we are excited about what opportunities it may bring for us and our shareholders and the patient communities that we serve.
Thank you for joining us today, and we look forward to sharing our progress with you in the future.
Operator
Thank you. This concludes Zevra Therapeutics call and webcast. You may disconnect your line at this time, and have a wonderful day.
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