MADISON, N.J.—Quest Diagnostics Inc., a provider of clinicallaboratory and diagnostic information services, has completed the sales of itsrights to royalties from commercialization of drug candidate ibrutinib toRoyalty Pharma for $485 million in cash. The transaction is expected to offerafter tax proceeds of roughly $300 million, before associated transactioncosts, and the profit will be recorded in the third quarter results andexcluded from adjusted earnings.
"We are pleased to have had an opportunity to work withQuest in this win-win transaction, in which Quest was able to dispose of anon-core asset as part of its strategic plan and we were able to acquire aninterest in ibrutinib, an exciting potential therapy addressing the needs ofpatients with chronic lymphocytic leukemia, small lymphocytic lymphoma andmantle cell lymphoma," Pablo Legorreta, founder & CEO of Royalty Pharma,said in a press release regarding the sale.
Quest Diagnostics gained rights to royalties on ibrutinib inconjunction with its acquisition of personalized disease management companyCelera Corporation in May 2011 through a short-form merger. The company stillretains royalty rights to other clinical indications from Celera's drug assets,including programs that target histone deactylase, or HDAC, selective HDACenzymes and Factor VIIa, and other Bruton's tyrosine kinase compounds.
Ibrutinib is a selective Bruton's tyrosine kinase inhibitorcurrently in Phase III development by Pharmacyclics and Janssen Biotech, aJohnson & Johnson subsidiary. The drug candidate is currently beingdeveloped as a treatment for a variety of B-cell malignancies, and multipletrials are underway evaluating the compound as both a monotherapy and incombination with other drugs.
"This transaction is consistent with our strategy to refocuson our core diagnostic information services business," Steve Rusckowski,president and CEO of Quest Diagnostics, commented in a statement. "Theibrutinib royalty rights were not core to our business. After consideringinterest in ibrutinib, we conducted a robust market process, and believe thatselling now is in the best interests of our shareholders. We expect to use theproceeds to drive shareholder value, consistent with our capital deploymentstrategy."
The sale of Quest Diagnostics' rights to royalties fromibrutinib is part of an ongoing divestment of various of the company's holdingsin order to refocus on its core business. Since the decision was made lastNovember, and a portfolio review performed, Quest Diagnostics has released twobusinesses: OralDNA, a dental diagnostics company, and HemoCue, a point-of-caretesting company, in addition to the ibrutinib royalty rights.
SOURCE: Quest Diagnostics press release
