Incyte has agreed to acquire the European operations of ARIAD Pharmaceuticals in a deal that could generate up to $289 million-plus for ARIAD, the companies said today.
Upon closing of the acquisition deal, which is expected to occur on or about June 1, Incyte has agreed to license exclusively ARIAD’s marketed leukemia treatment Iclusig® (ponatinib) in the European Union and 22 other countries, including Israel, Norway, Russia, Switzerland, and Turkey.
The deal comes more than a month after ARIAD disclosed plans to reduce its workforce by 25%—approximately 90 headquarters positions in the U.S. and Europe—as part of a companywide strategic review. In addition to workforce reduction, ARIAD stated at the time in a regulatory filing, ARIAD’s review included an evaluation of commercial maximization initiatives, geographical presence, R&D portfolio, and business development opportunities to support the company’s overall strategic direction.
“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,” ARIAD President and CEO Paris Panayiotopoulos said today in a statement.
Iclusig is a kinase inhibitor designed to work by inhibiting BCR-ABL, an abnormal tyrosine kinase that is expressed in chronic myeloid leukemia (CML) and Philadelphia chromosome–positive acute lymphoblastic leukemia (Ph+ ALL). Iclusig also targets isoforms of BCR-ABL that carry mutations conferring resistance to treatment, including the T315I mutation, which has been associated with resistance to other approved tyrosine kinase inhibitors.
Iclusig is approved in Europe for patients with CML and Ph+ ALL who are resistant to or intolerant of certain second-generation BCR-ABL inhibitors and all patients who have the T315I mutation.
By acquiring ARIAD’s European workforce of 125 employees—including medical, sales, and marketing personnel—Incyte aims to speed up its expansion into Europe and help enhance clinical development there.
“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,” added Incyte CEO Hervé Hoppenot.
The deal will also enable ARIAD to focus on promoting Iclusig in the U.S., the companies added, while strengthening its financial position. The transaction also allows for the Iclusig rights to be bought back by ARIAD should the company be acquired by another entity.
Under the buy-back, ARIAD’s acquirer would have to repay the upfront and milestone payments, plus pay an additional amount based on Iclusig sales during the previous 12 months and royalties of 20–25% on sales for the remaining royalty term. The buy-back cannot be exercised before 2 years or after 6 years from the closing of the Incyte–ARIAD deal and includes a transition period of up to 1 year.
Incyte agreed to shell out $140 million cash upfront for ARIAD Pharmaceuticals (Luxembourg), the parent company of ARIAD’s European subsidiaries. Incyte has also agreed to fund a portion of the ongoing clinical development of Iclusig in ARIAD’s OPTIC and OPTIC-2L clinical trials through cost-sharing payments of up to $7 million in each of 2016 and 2017.
Incyte agreed as well to pay ARIAD tiered royalties of between 32% and 50% on net sales of Iclusig, plus up to $135 million in payments tied to achieving development and regulatory milestones for Iclusig in new oncology indications in territories covered by the deal. In those areas, Incyte will also pay ARIAD additional milestone payments for non-oncology indications.
The deal is expected to reduce ARIAD’s 2017 annual operating expenses by approximately $65 million and add to Incyte’s earnings in 2018, the companies said.
