Eli Lilly and Company (Lilly) has agreed to divest its nasally administered severe hypoglycaemia drug, Baqsimi, to US-based biopharmaceutical company Amphastar Pharmaceuticals.

Baqsimi is a nasally administered glucagon, indicated for the treatment of severe hypoglycaemia (very low blood sugar) in people with diabetes.

Launched in 2019, as an option to rapidly support in rescue situations for people with diabetes who take insulin, the drug is currently available in 27 markets worldwide.

Under the terms of the agreement, Amphastar will make a $500m cash payment at closing, along with an additional cash payment of $125m one year after the closing.

Lilly is eligible to receive sales-based milestone payments of up to $450m.

The transaction, which has been approved by the boards of directors of both companies, is expected to be completed in the second or third quarter of this year.

The closing is subject to the satisfaction of customary closing conditions, but not any financing conditions.

Lilly Diabetes and Obesity executive vice president and president Mike Mason said: “Our portfolio of therapies continues to make life better for people with diabetes, and we will continue this important mission while also increasing our focus on advancing our pipeline of potential breakthrough treatments.

“BAQSIMI’s positive impact has been felt by people with diabetes around the globe and we’re working closely with Amphastar to facilitate a successful transition and consistent patient experience.”

Amphastar is a biopharmaceutical company focused on developing, manufacturing, and marketing injectable, inhalation and intranasal products, including insulin API products.

The company is expected to provide dedicated investment for Baqsimi to enable more people on insulin to be prepared with a glucagon rescue treatment for severe hypoglycaemia.

It is securing new senior secured credit facilities in connection with the transaction.

Wells Fargo Bank, Capital One, J.P. Morgan Chase Bank, Fifth Third Bank, East West Bank, Cathay Bank and CIBC Bank USA are providing a debt financing commitment to Amphastar.

The company intends to use the proceeds from its senior credit facilities, together with available cash, to fund a part of the purchase price.

Kirkland & Ellis and Covington & Burling served as legal counsel, and J.P. Morgan Securities as financial advisor to Lilly, while Wilson, Sonsini, Goodrich & Rosati served as legal counsel, and Jefferies as financial advisor to Amphastar, on the transaction.

Amphastar president and CEO Jack Zhang said: “The acquisition of Baqsimi will integrate our core strategic vision of strengthening our proprietary products profile in addition to enhancing our diabetes portfolio offering.

“We are optimistic about Baqsimi’s growth potential as it is the first and only commercial intra-nasal glucagon demonstrated to treat low blood sugar emergencies.”