Drug delivery specialist Orexo AB is acquiring Swedish neighbor Biolipox, taking on the latter's pipeline in inflammatory diseases, pain management and respiratory conditions in exchanges for SEK856 million (US$133 million) in Orexo stock.

The sale will take place through an issue in kind to Biolipox's shareholders, and will be made through an issue of a maximum of 8.56 million Orexo shares. The final structure of the transaction depends on Orexo's completion of due diligence of Biolipox. The deal also is conditional upon approval of the issue in kind by an extraordinary general meeting of Orexo and customary regulatory approvals.

The combined firm will have an estimated market capitalization of approximately SEK2.3 billion (US$358 million). Biolipox's shareholders will own 38 percent of the combined company.

The company will retain the Orexo name, and will be headquartered in Orexo's home in Upsala. Torbjörn Bjerke, CEO of Biolipox, will serve as president and CEO of the new company and Orexo's current CEO, Zsolt Lavotha, will leave his operational duties to serve as senior advisor to Orexo's board.

Biolipox's pipeline includes several development projects in the areas of pain management and respiratory diseases, following a strategy of seeking new partnerships at an early stage to reduce financial risk.

Orexo has grown as a specialty pharmaceutical company by identifying therapeutic characteristics of existing products and developing more efficient means of delivering those drugs.