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Oct 22, 2013

PDL BioPharma Acquires Diabetes Royalty, Milestone Rights for $240.5M

  • PDL BioPharma said today that it acquired a portfolio of rights to royalties and milestones for sales of type 2 diabetes products licensed by Depomed for $240.5 million cash.

    Under the agreements, PDL will receive all royalty and milestone payments until it has received payments equal to twice the cash paid to Depomed, or $481 million. After that, all payments received will be shared evenly between PDL and Depomed.

    Rights acquired include Depomed's royalty and milestone payments accruing from October 1 and after:

    • From Santarus with respect to U.S. sales of Glumetza® (metformin HCL extended-release tablets), a once-daily product for adults with type 2 diabetes. Last year, Depomed reported royalty revenues of $42.8 million based upon net sales of Glumetza by Santarus. PDL will receive Depomed's royalties on net sales of Glumetza of 32% for the rest of 2013 and full year 2014, and 34.5% in 2015 and beyond. If a generic entry of a Glumetza product reaches the U.S. market, PDL said it will share proceeds equally with Santarus based on a gross margin split.
    • From Merck with respect to sales of Janumet® XR (sitagliptin and metformin HCL extended-release) for type 2 diabetes, approved by the FDA last year. PDL will receive what it only disclosed as Depomed's “very low single digit” royalty on Merck's net sales of Janumet XR in the United States and other licensed territories through the expiration of the licensed patents pursuant to Depomed's license arrangement with Merck.
    • From Janssen Pharmaceutica with respect to potential future development milestones and sales of its investigational fixed-dose combination of Invokana® (canagliflozin), a sodium glucose transport 2 (SGLT2) inhibitor, and extended-release metformin. Janssen Pharmaceutica has worldwide rights to Acuform delivery technology for the development and commercialization of the Invokana-metformin fixed-dose combination. Subject to clinical development and product approval, PDL may receive Depomed's milestone payments and royalties on worldwide net sales of products sold by Janssen under the Depomed license.
    • From Boehringer Ingelheim (BI) with respect to potential future development milestones and sales of the investigational fixed-dose combinations of drugs and extended-release metformin subject to Depomed's license agreement with BI. The company has worldwide rights to Depomed's Acuform® delivery technology for development and commercialization of combo products including extended-release metformin and BI compounds in development for type 2 diabetes. Subject to clinical development and product approval, PDL may receive Depomed's milestone payments based on regulatory filings and approval events, as well as royalties on worldwide net sales of products sold by BI.  
    • From LG Life Sciences and Valeant Pharmaceuticals for sales of extended-release metformin in Korea and Canada, respectively.

    "The acquisition of Depomed's diabetes royalty rights is a significant addition to our income-generating assets," PDL BioPharma CEO John McLaughlin said in a statement. "This acquisition allows PDL to participate in a potentially lengthy, diversified stream of royalties on products in different classes across the diabetes area."

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