Sun Pharmaceutical Industries, the world’s fourth largest speciality generic drug company, has signed a definitive agreement to acquire US-based Concert Pharmaceuticals for $576 million in equity consideration.

The deal will allow the Indian company to advance its treatment for alopecia areata, a skin condition that causes hair loss.

Sun Pharma will acquire all of Concert’s outstanding shares through a tender offer for an upfront payment of $8 per share in cash. Concert shareholders will also receive a non-tradable contingent value right (CVR) entitlement to an additional $3.5 per common share in cash, the Indian company said in a stock exchange update.

In late-stage development, CVR is paid when deuruxolitinib, an oral inhibitor for the treatment of alopecia areata, achieves certain net sales milestones within specified periods. It added that the board approved the deal for both companies.

The $8 per share upfront represents a roughly 33% premium to Concert’s 30-day volume-weighted average price as of January 18.

The transaction, subject to tender for most of the outstanding shares of Concert common stock and regulatory approvals, is expected to close in the first quarter of 2023.

After successfully completing the tender offer, Sun Pharma will act in Concert to acquire all remaining untendered shares. In addition, it will purchase all of Concert’s preferred stock at $8 per share plus non-tradeable CVR through a second-step merger.

Nasdaq-listed Concert is a late-stage biotech company pioneering the use of deuterium in medicinal chemistry, with a patent portfolio that includes its lead product candidate, deuruxolitinib.

Concert completed the efficacy and safety evaluation of deuruxolitinib in adults with moderate to severe alopecia areata in its THRIVE-AA Phase 3 clinical program. Two open-label long-term extension studies are ongoing in North America and Europe.

Sun Pharma’s near-term focus will be to follow Concert’s plan to file a New Drug Application with the US Food and Drug Administration in the first half of 2023.

Alopecia areata is an autoimmune disease in which the immune system attacks hair follicles, causing partial or complete hair loss on the scalp and body. Episodes of the disorder can occur throughout life, affect both women and men, and can be associated with severe psychological consequences, including anxiety and depression. Currently, there are limited treatment options available for this disease.

Moelis & Company is Sun Pharma’s financial advisor, and Davis Polk & Wardwell is its legal advisor. MTS Health Partners and Chestnut Partners acted as financial advisors to Concert, and Goodwin Procter served as legal advisors. For the nine months ending September 2022, Concert reported a net loss of $90.6 million on gross revenue of $29,000. On September 30, Concert had approximately $148.9 million in cash and investments. As of September 30, 2022, Sun Pharma had net cash of $1.6 billion.