Incyte Buys Ariad's EU Operations and Iclusig Rights for $140 Million Upfront

Incyte Buys Ariad's EU Operations and Iclusig Rights for $140 Upfront May 9, 2016
By Mark Terry, Breaking News Staff

Wilmington, Del.-based Incyte Corporation announced today that it is acquiring Cambridge, Mass.-based Ariad Pharmaceuticals ' European operations. In addition, it has also signed a licensing agreement for exclusive development and commercialization rights to Ariad’s Iclusig (ponatinib) in Europe and other specific countries.

Iclusig is approved in Europe to treat chronic myeloid leukemia (CML) and Philadelphia-positive (Ph+) acute lymphoblastic leukemia (ALL) who are otherwise resistant to or intolerant of some second generation BCR-ABL inhibitors, as well as all patients who have the T315l mutation. The licensing deal allows for development and commercialization of Iclusig in the European Union and 22 other countries, including Switzerland, Norway, Turkey, Israel and Russia.

Ariad will receive tiered royalties of between 32 and 50 percent on net sales, and up to $135 million in possible development and regulatory milestones. There is also the possibility of milestones for non-oncology indications.

In addition, Incyte will fund some of Ariad’s clinical development of Iclusig in two clinical trials, OPTIC and OPTIC-2L, by way of a cost-sharing deal that could hit $7 million in each 2016 and 2017.

“The acquisition of Ariad’s European operations is a unique and strategic opportunity for Incyte, which will further establish our medical and commercial footprint in Europe,” said Herve Hoppenot, Incyte’s chief executive officer, in a statement. “Adding the Ariad team’s experience, talent, resources and relationships to our existing European organization accelerates our planned global expansion and leaves us well-positioned to maximize the potential future European launches from our rich development portfolio.”

The acquisition of the European operations is via an acquisition of all shares of Ariad Pharmaceuticals (Luxembourg) S.a.r.l. This will account for a $140 million payment to Ariad via cash on hand. The European sale includes 125 people, including medical, sales, and marketing staff.

Ariad’s European headquarters are based in Lausanne, Switzerland. Last year, Ariad brought in $112.5 million in Iclusig global net product sales revenue.

The agreement also includes an option for any company that buys Ariad to buy back the Iclusig rights by repaying the upfront and milestones payments, with an additional sum based on Iclusig sales during the previous 12 months and royalties of 20 to 25 percent on sales during the rest of the agreement. This can be done before two years or after six years of the transaction’s close.

Ariad’s president and chief executive officer, Paris Panaylotopoulos, took over the company in January of this year and it was clear a big part of his job was going to be cost-cutting. In a February fourth-quarter financial conference call, he reported that total yearly revenues were $118.8 million, up from $105.4 million in 2014. Unfortunately, Ariad’s total operating expenses for 2015 were $336.1 million, up from $265.6 million in the previous year, which gave the company a net loss of $231.2 million in 2015.

Today’s announcement is part of Panayiotopoulos’s strategic review, and is expected to close on June 1. It is expected to cut the company’s 2017 annual operating expenses by approximately $65 million.

Investors, in general, seem to be hoping that all of Ariad might be acquired by another company. They are also keeping an eye on the company’s cancer drug, brigatinib, for the treatment of anaplastic lymphoma kinase positive (ALK+) non-small cell cancer lung cancer (NSCLC). It is currently in a global Phase II trial. In October 2014, it received Breakthrough Therapy designation from the U.S. Food and Drug Administration (FDA).

“The decision to divest our European operations and out-license the commercial rights to Iclusig in Europe is one of the key outcomes of our ongoing strategic review,” Panaylotopoulos said in a statement. “We are delighted to have Incyte as a committed partner to continue Iclusig’s strong revenue growth in Europe, while significantly strengthening our financial position and maintaining future strategic optionality with a potential buy-back of Iclusig.”

Back to news