Prosidion DPP-IV patent estate sold to Royalty Pharma

Astellas Pharma Inc. recently announced the sale of Prosidion’s patent estate and associated royalty stream relating to the use of dipeptidyl peptidase IV (DPP-IV) inhibitors for treating Type 2 diabetes to Royalty Pharma for a total cash payment of $609 million.

Kelsey Kaustinen
TOKYO—Astellas Pharma Inc. recently announced the sale ofProsidion's patent estate and associated royalty stream relating to the use ofdipeptidyl peptidase IV (DPP-IV) inhibitors for treating Type 2 diabetes toRoyalty Pharma for a total cash payment of $609 million. Per the terms of theagreement, Royalty Pharma will be entitled to 100 percent of royalty paymentsand milestones related to the DPP-IV asset and will assume control ofadministration of the DPP-IV patent estate as well. The transaction is expectedto close in July 2011.
 
 
"We are honored to have had the opportunity to work withAstellas in this important strategic transaction. Royalty Pharma's goal is tobe a financial partner to large biopharmaceutical companies seeking to expandtheir product pipelines by acquiring biotech and other life sciences companies,many of which hold significant passive royalty assets," said Pablo Legorreta,Chief Executive Officer of Royalty Pharma, in a press release. "By partneringwith Royalty Pharma, acquirors can reduce the amount of capital spent toacquire strategic, value-creating assets and, in doing so, preserve capital tofund other strategic acquisitions or its internal pipeline. This transactionfits squarely within this strategy. The DPP-IV royalties are very high qualityasset that will be an excellent addition to our diversified portfolio ofleading biopharmaceutical royalties."
 
 
Prosidion acquired the portfolio of patents related to theuse of DPP-IV inhibitors for treating Type 2 diabetes in 2004, and severalnon-exclusive licenses to the patents have been gratned to pharmaceuticalcompanies worldwide. Astellas gained Prosidion as part of its acquisition ofOSI Pharmaceuticals last June. Though the company is still reviewing how thiswill affect its financial forecasts for the fiscal year ending March 31, 2012,Astellas presently expects a minimal impact from the acquisition.
 
 
"The sale of Prosidion's DPP-IV patent estate and royaltystream supports our strategic goal of maximizing value for Astellas'shareholders," said Yoshihiko Hatanaka, President and Chief Executive Officerof Astellas, in a press release about the deal. "The sale of this large,passive, non-core financial asset will free up capital for reinvestment instrategic initiatives. We are pleased to have been able to work with RoyaltyPharma in this important transaction."
 
 
Prosidion's assets also include two drug candidatescurrently in development for diabetes and obesity as well as research anddevelopment capabilities, assets for which Astellas will continue to considerstrategic alternatives. The company is planning to complete its review ofpotential alternatives for those assets as soon as possible, alternatives whichcould include minority investment, strategic alliance, a merger or sale of someor all of those assets. Astellas will wait to release additional informationabout the review until an agreement is entered into or the process is completedanother way.
 
 
Astellas brought on Citi as financial advisor and Allen& Overy LLP as legal advisor for this transaction. Royalty Pharma broughtLazard Frères & Co. LLC and Greenhill & Co., LLC on as financialadvisors and Goodwin Procter LLP, Akin Gump Strauss Hauer & Feld LLP andFitzpatrick, Cella, Harper & Scinto as legal advisors for this transaction.
 
 
 
SOURCE: Royalty Pharma press release

Kelsey Kaustinen

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