On February 13, 2019 Clinigen Group plc (AIM: CLIN, ‘Clinigen’ or the ‘Group’), the global pharmaceutical and services company, reported that it has signed an agreement with Novartis to acquire the US rights to Proleukin (aldesleukin, human recombinant interleukin-2) for up to $210m in cash, consisting of an upfront and deferred payments along with future sales related milestones (Press release, Clinigen Group, FEB 13, 2019, View Source [SID1234554017]).
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Clinigen already owns the rights to Proleukin outside the US, which it acquired in July 2018.
Highlights
Proleukin is indicated for metastatic melanoma and metastatic renal cell carcinoma in the US
Clinigen will be the exclusive global owner of the licensed version of this drug
Currently being used in around 80 active studies within the US across multiple disease areas
Has the potential to become an integral part of cancer combination therapies
Total consideration: up to $210m for US rights to Proleukin
Initial $120m payable
$60m deferred consideration over the 12 months following completion
A further $30m consideration based on sales milestones
In the year to 30 June 2018, in the US, Proleukin made revenue of $60.0m according to IQvia (IMS). Gross profit margin is expected to be similar to other specialty medicines within the Commercial Medicines division
The acquisition will be modestly EPS accretive in the current financial year as the product transitions to Clinigen, and at least 25% accretive in the first full financial year
Clinigen has increased its debt facility from £300m to £375m; terms of the extended debt remain unchanged with the facility in place until October 2023
Proleukin further diversifies the Commercial Medicines portfolio of niche hospital-only and critical care products. The Group currently owns three product assets within the US – Foscavir, Ethyol and Totect with commercial rights currently licensed to Pfizer (Foscavir) and Cumberland Pharmaceuticals (Ethyol and Totect)
Clinigen expects adjusted EBITDA* in the six months ended 31 December 2018 to be £41.8m (2017: £34.4m) representing 22% reported growth or 8% growth on an organic basis**, underlining how the Group continues to be highly cash generative.
On completion, the Group’s bank covenant leverage*** is expected to be around 2.4x net debt / EBITDA before reducing towards 2.0x by 31 December 2019.
The completion of the acquisition is subject to US anti-trust clearance and is expected to occur in April 2019.
Shaun Chilton, Group Chief Executive Officer, Clinigen, said:
"This highly earnings enhancing acquisition of US rights to Proleukin is significant to the whole Group not just the Commercial Medicines division.
"As part of Commercial Medicines, Proleukin is an excellent fit within our oncology and infectious disease medicines as well as diversifying our wider portfolio – it will be the largest product in the portfolio in terms of current sales. The product has significant potential for revitalisation, which will provide further breadth and diversity to the portfolio and material increases in revenues.
"For Clinigen as a whole, Proleukin creates an ideal platform to expand our existing footprint in the higher value US market and therefore enables us to exploit other opportunities across the business. This follows our acquisition last year of CSM and iQone which strengthened our Continental European footprint.
"At the financial level, the combination of this deal structure and the Group’s cash generative nature will ensure our debt profile reduces quickly over the next year."