Organon Stock Slides Despite Hookup with ObsEva

Organon (NYSE: OGN) found its stock headed downward early Tuesday, as the result of a deal with ObsEva (NASDAQ: OBSV).

Under terms of the deal, Organon will license the global development, manufacturing and commercial rights to ebopiprant (OBE022). Ebopiprant is an investigational, orally active, selective prostaglandin F2α (PGF2α) receptor antagonist being evaluated as a potential treatment for preterm labor by reducing inflammation and uterine contractions. If approved, it has potential to be a first-in-class innovation for this common and serious condition with no approved therapies for acute treatment of preterm labor in the United States.

"This development-stage asset is being studied in one of the most crucial unmet needs for women globally. As we build Organon’s women’s health research and development portfolio, the agreement strengthens our path to long term growth," said Organon CEO Kevin Ali,

Organon intends to work with the scientific and medical communities and regulatory authorities in major markets, including the United States, to advance the clinical development and registration of ebopiprant.

Under the terms of the agreement, Organon will gain exclusive worldwide rights to develop and commercialize ebopiprant. ObsEva is entitled to receive tiered double-digit royalties on commercial sales as well as up to $500 million in upfront and milestone payments including $25 million to be paid at signing, up to $90 million in development and regulatory milestones and up to $385 million sales based milestones. Goldman Sachs acted as exclusive financial advisor to ObsEva.

OGN shares fell 41 cents, or 1.4%, to $29.24, while those for OBSV popped 30 cents, or 11.9%, to $2.82.