Art of the deals

Takeda announces plans to acquire Brazil’s Multilab just before closing deal on U.S.-based URL Pharma

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OSAKA, Japan—In a span of less than two weeks, from late Mayto early June, Takeda Pharmaceutical Co. Ltd. put out word of a plan to acquireBrazilian company Multilab Indústria e Comércio de Produtos Farmacêuticos Ltda.(Multilab) of São Jerônimo, Rio Grande do Sul, even as it geared up to put thefinishing touches on its acquisition of Philadelphia-based URL Pharma Inc. inthe United States.
May 25 saw the announcement that wholly owned subsidiaryTakeda Farmacêutica Brasil Ltda. of São Paulo, Brazil, would pony up more than$240 million in a cash deal to enhance Takeda's business infrastructure inBrazil. In addition to the upfront payment, the deal calls for as much as $19million in additional future milestone payments to the owners of Multilab.Takeda expects that the transaction will be finalized by the end of the secondquarter of its fiscal year 2012. Other financial conditions were not disclosed,and Takeda has said it doesn't expect to revise earnings guidance for 2012 inconnection with this acquisition.
Takeda already has a presence in Brazil, where itmanufactures and markets prescription drugs, in addition to well-known,over-the-counter brands such as the analgesic Neosaldina, the digestive Eparemaand the antibacterial Nebacetin. The mid-sized pharma Multilab brings to Takedaa mix of branded generic drugs and over-the-counter pharmaceutical products.Among them is the nation's best-selling (in terms of units sold)over-the-counter cold and flu treatment, Multigrip, which Takeda has indicatedit sees as an "excellent addition" to its existing over-the-counter offerings inBrazil.
In addition to well-recognized products, Multilab alsobrings with it annual net revenues of roughly $68 million, with even more instore for 2012, perhaps, as Takeda notes that retail sales for Multilab grew inexcess of 20 percent per annum from 2009 to 2011.
"This acquisition significantly reinforces Takeda's positionin Brazil, which is the world's sixth-largest economy and the biggest in SouthAmerica," according to Jostein Davidsen, head of emerging markets commercialoperations for Takeda—in fact, the completion of the deal will reportedly putTakeda among the top-10 pharmaceutical companies in Brazil. "Takeda hasambitious plans for growth in emerging markets. Brazil is our second-largestemerging market after Russia/CIS [Commonwealth of IndependentStates] in terms of revenues, and the acquisition of Multilab is a clearsignal of our intention to become a significant player both in Brazil and otherhigh-growth markets."
Takeda sees the deal as boosting its strategic position inBrazil generally and diversifying its portfolio to better meet the needs of thelocal market, but the company also sees a chance with this acquisition tobetter tap the growing emergence of middle-class consumers, it says.
In turn, Multilab will benefit from joining the Takeda foldby likely reinforcing its market position and reaching more people in Brazilwith its key products, notes Hilton Cavedon, executive director of Multilab.
Following the Multilab announcement was the June 5 newsrelease announcing that Takeda, through its wholly owned U.S. subsidiary TakedaPharmaceuticals USA Inc., had completed its acquisition of URL Pharma Inc. foran upfront payment of $800 million. The deal also includes an agreement forfuture performance-based contingent earn-out payments.
The main prize there was Colcrys (colchicine), URL Pharma'sleading product for the treatment and prevention of flares associated withgout. The acquisition will result in an immediate increase in revenue withestimated fiscal year 2012 net sales of more than $550 million, most of whichcomes from Colcrys, which posted more than $430 million in net 2011 sales. AsTakeda notes, the acquisition is accretive to both GAAP and non-GAAP operatingincome immediately and "provides a strong, profitable and long-term source ofrevenue that complements Takeda's existing U.S. business," with somemarket-watchers noting more specifically that it will do much to plug therevenue hole from generic competition to Takeda's diabetes drug Actos.
Colcrys also complements Takeda's existing position in thegout marketplace with Uloric (febuxostat), which is used to lower blood uricacid levels in adults with gout.
"The acquisition of URL Pharma is a meaningful opportunitythat delivers on our commitment to strengthen Takeda's presence in the U.S. byadding products that amplify our expertise in primary care," noted TakedaPharmaceuticals USA President Douglas Cole of the deal. "This commitment allowsus to broaden our focus for patients by providing multiple therapeutic offeringsfor gout, which affects more than 8 million Americans."

Takeda transfers dementia candidate to Tokyo's NationalUniversity Corporation
OSAKA, Japan—Takeda Pharmaceutical Co. Ltd. recentlyfinalized a contract to transfer TAK-070, which was previously developed byTakeda as a potential treatment of Alzheimer-type dementia, to the NationalUniversity Corporation at the University of Tokyo.
Takeda will receive an upfront payment and a certain rate ofroyalty from the sales generated through the University of Tokyo if TAK-070 iscommercialized. No other financial conditions are disclosed.
TAK-070 was discovered by Takeda, and acts to inhibit the β-secretaseenzyme. Amyloid-β-protein is postulated as a fundamental cause ofAlzheimer-type dementia, and is produced by the action of β-secretase onAmyloid-β-precursor protein. TAK-070 therefore suppresses the production ofamyloid-β protein by inhibiting this β-secretase.
The University of Tokyo Hospital is designated by theMinistry of Health, Labour and Welfare as the base for "the nationalearly/exploratory clinical trial project." The project aims to conquer dementiaand intractable neurological and psychiatric diseases, and it is preparing tobuild a system that will enable the continuous conduct of clinical studiesranging from early-stage clinical trials to POC studies by introducing drug candidatesfrom both home and abroad. TAK-070 will be the first new drug candidate toundergo clinical research at this hospital.
"TAK-070 may possibly prevent or suppress the progression ofAlzheimer-type dementia," said Dr. Takeshi Iwatsubo, professor ofneuropathology at the university's Graduate School of Medicine. "We willproceeded with clinical research on TAK-070 by using know-how which has beenaccumulated from the participation in large-scale clinical networks such asJ-ADNI for diagnostic imaging and biomarker identification for Alzheimer-typedementia, and contribute to the creation of innovative drugs originating inJapan."
"Although we chose not to continue the clinical developmentof TAK-070, Takeda is eager to use all our molecules in any way that can bringbenefit to patients, and we believe that transferring TAK-070 to University ofTokyo Hospital is a great way of doing this," said Paul Chapman, generalmanager of Takeda's Pharmaceutical Research division. "I have great hope thatin the near future, the University of Tokyo Hospital will use the greatexperience they have created at the Unit for Early and Exploratory ClinicalDevelopment to develop not only TAK-070, but also other new treatments forpatients with Alzheimer-type dementia."

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