Kirin Cashes Out of Amgen Drug Joint Venture for $780M
Amgen and Kirin Holdings have decided to dissolve their joint venture, Kirin-Amgen. It will become a wholly-owned subsidiary of Amgen.
The venture was formed in 1984 with the intention of funding the worldwide development of Epogen (epoetin alfa). The collaboration expanded to include Neupogen (filgrastim), Neulasta (pegfilgrastim), Aranesp (darbepoetin alfa), Nplate (romiplastim) and brodalumab. The intellectual property was held by Kirin-Amgen, and licensed the marketing rights in specific Asian markets to Kyowa Hakko Kirin (KHK), Kirin’s pharmaceutical subsidiary. It also licensed other territories to Amgen.
Under the new arrangement, Kirin-Amgen will pay Kirin $780 million. Amgen will make more payments to Kirin related to specific sales that Amgen has valued at about $30 million. Because Amgen will be the sole owner of Kirin-Amgen, Amgen will own the product rights and any remaining cash held by Kirin-Amgen. The Asian territory marketing rights held between Kirin-Amgen and KHK will stay the same.
The new agreement is expected to close in the fourth quarter of this year or the first quarter of 2018.
“Our historic partnership with Kirin played a pivotal role in the growth of Amgen from a small, venture-backed start-up to one of the world’s largest biotechnology companies,” said Robert Bradway, chairman and chief executive officer at Amgen, in a statement. “I would like to thank Kirin for more than three decades of partnership, which has enabled us to reach patients suffering from serious illness around the world with meaningful therapies. We look forward to continuing what has been Amgen’s longest-running collaboration through our ongoing relationship with KHK.”
Kirin is better known as a brewer. It said in a statement that its pharmaceuticals and biochemical business will stay central to the company and not be affected by the termination of the joint venture deal.
Amgen released its third-quarter financial results on Oct. 25, reporting total revenues for the quarter of $5.8 billion, a 1 percent decrease from the previous year’s third quarter. GAAP earnings per share (EPS) grew 3 percent to $2.76.
The company also provided an update on its Puerto Rico operations, as of five weeks after Hurricane Maria. The company indicated it was providing support to its staff and the local community while pushing its business continuity plans and restoring manufacturing at its site in Juncos. Its drug substance manufacturing and packaging facilities are fully operational and expected to resume formulation, filling and small molecule commercial production by the end of October 2017.
Related to Hurricane Maria, Amgen incurred $67 million in pre-tax expenses, or $0.07 EPS, in the third quarter. In the upcoming fourth quarter, it expects additional pre-tax expenses related to the hurricane from $75 million to $100 million, which is $0.08 to $0.11 EPS. It didn’t expect a significant impact to its full-year 2018 results, but the figures also do not include possible insurance recoveries.
Also, in the third quarter of 2017, Amgen generated $3.3 billion of free cash flow.
“We are seeing strong, volume-driven growth in our recently launched products, as we also effectively manage the life cycle of our mature products,” Bradway said in a statement. “Disciplined expense management and ongoing process improvements continue to provide the financial flexibility needed to invest in our best opportunities for long-term growth.”