Japan-based Astellas Pharma has agreed to purchase US-based bioelectronic company iota Biosciences in a transaction valued up to $429m.

According to the agreement, Astellas will make an initial payment of approximately $127.5m to obtain all of the outstanding equity in iota not already held by Astellas.

iota shareholders will receive additional payments of up to a total of $176.5m upon achievement of predetermined milestones by iota.

Upon the completion of the transaction, iota will become a wholly owned subsidiary of Astellas.

Astellas has also agreed to spend a total of $125m over the next five years to support iota’s expansion.

The deal builds on a research and development agreement signed by the companies in August last year.

According to the agreement, both parties jointly carried out research and development activities related to iota’s ultrasonic-powered bioelectronic devices in a number of indications.

In carrying out the activities contemplated under the R&D agreement, the companies evaluated detailed specifications for implantable medical devices focused on multiple diseases with high unmet medical needs.

Astellas president and CEO Kenji Yasukawa said: “I believe that iota’s technology is a promising core technology that can be applied not only to the current programmes we are working on but to broader types of diseases that have yet to be worked on.

“I expect that the combination of their capabilities with our strength cultivated through our Rx business will become a strong basis to further drive our Rx+ business.”

The acquisition, which contemplates the utilisation of iota’s technology as a platform to advance innovation in the bioelectronics field, will provide iota’s bioelectronics technology and its team to Astellas.

It is expected to help Astellas expand its Rx+ business by expediting the Rx+ projects, which were covered under the R&D agreement earlier.

Additionally, the company will also be able to explore other applications of iota’s bioelectronics technology for new target diseases and develop new technologies.

iota Co-founders and Co-CEOs Michel Maharbiz and Jose Carmena said: “The partnership between iota Biosciences and Astellas allows us to combine our respective strengths to bring revolutionary new approaches to managing and treating diseases that affect hundreds of millions of people across the world.

“A new era in bioelectronic medicine is dawning and iota Biosciences, powered by Astellas, will be leading the charge.”

Subject to customary closing conditions, the transaction is expected to close before next March.

Astellas said it is still reviewing the financial impacts of this transaction for the fiscal year, ending 31 March 2021.