Deal with current marketing partner releases MediGene from further financial obligations.

MediGene has sold full European marketing and distribution rights to its prostate cancer drug Eligard® to Astellas Pharma Europe for €25 million (about $31.6 million) plus royalties. Astellas partnered with MediGene in the latter’s European approval process for Eligard and has distributed the drug in Europe since 2004.

The new deal means that within the next few months MediGene will be free from all future costs, obligations, and risks associated with the supply of Eligard to Astellas. It will have no more procurement cost obligations or license payments to make to Tolmar, which originally licensed the drug to MediGene for development in Europe.

MediGene says that the new agreement with Astellas is ideal on both a financial and strategic basis. “The structure of the deal allows MediGene to continue to benefit from the increasing revenue from Eligard which was not possible under the previous structure,” comments Arnd Christ, MediGene CFO. “The significant improvement of our balance sheet and the simplification of the Eligard deal structure allow us to fund growth opportunities and thus strengthen the future pipeline of the company.”

Under the former deal structure MediGene’s net margin decreased once net sales by Astellas exceeded a certain threshold, capping royalty receipts. The new agreement means that MediGene will now receive a low single-digit royalty on net sales of Eligard generated by Astellas in Europe. In 2009, MediGene’s net participation in Eligard sales by Astellas totaled about 6%. In the future MediGene will receive about one third of this margin on Eligard in-market sales. The €25 million Astellas is paying the firm will be made in three tranches: €5 million up front, €15 million anticipated within six to eight months, and €5 million anticipated within six to twelve months.

Eligard is a hormone-based compound for the treatment of advanced, hormone-dependent prostate cancer that is available in one-month, three-month, and six-month formulations. The drug is injected subcutaneously in a gel-like formulation that slowly dissolves. In 2009, Eligard sales generated by Astellas throughout 25 European countries exceeded €100 million (about $126 million) for the first time, MediGene states.

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