Generic drugs provider Perrigo Co plc (NYSE/TASE: PRGO) said it agreed to divest its rights to the royalty stream from the sales of multiple sclerosis drug Tysabri (natalizumab) to RPI Finance Trust, an affiliate of New York-based Royalty Pharma, in a deal valued at up to $2.85 billion. The sale price consists of $2.2 billion in cash at closing and up to $650 million in potential milestone payments.
The deal is expected to close within 30 business days, subject to certain specified closing deliverables.
“Today’s announcement is the result of Perrigo’s review of strategic alternatives for the Tysabri royalty stream announced in November 2016,” said Perrigo CEO John T. Hendrickson. “While dilutive to adjusted EPS, the significant upfront cash component will allow us to de-lever our balance sheet, which supports our investment grade financial policy, and better positions Perrigo to pursue our strategic plan.”
From its beginning in 1887 as a packager of home remedies, Perrigo, headquartered in Ireland, has grown to become the world’s largest manufacturer of OTC healthcare products and supplier of infant formulas for the store brand market. The company is also a leading provider of generic extended topical prescription products in the U.S. Perrigo provides quality affordable healthcare products across a wide variety of product categories and geographies, primarily in North America, Europe, and Australia, as well as in other markets, including Israel, China, and Latin America
Perrigo acquired the rights to the Tysabri royalty stream through the company’s 2013 acquisition of Elan Corporation plc.
“We are pleased to complete this important transaction with Perrigo and help Perrigo meet its strategic objective,” said Royalty Pharma CEO, Pablo Legorret. “Our diversified portfolio results in a low cost of capital, enabling us to provide the highest value to holders of royalties. Tysabri® is a product we have followed for many years, serving an important need in patients suffering from multiple sclerosis.”
Founded in 1996, Royalty Pharma is a leader in acquiring revenue-producing intellectual property within the biopharmaceutical industry, with over $15 billion in royalty assets. The company’s portfolio includes royalty interests in over 40 approved products including AbbVie’s Humira, AbbVie and J&J’s Imbruvica, Biogen’s Tecfidera, Vertex’s Kalydeco and Orkambi, J&J’s Remicade, Merck’s Januvia, Gilead’s Atripla and Truvada, Pfizer’s Lyrica, and Astellas and Pfizer’s Xtandi. Royalty Pharma is also a leading investor in pre-approval royalties, having committed over $850 million to direct R&D funding in exchange for royalties, and having invested over $4 billion in royalties on pre-approval products since 2011.
Morgan Stanley & Co. LLC acted as sole structuring agent and lead financial advisor to Perrigo. Evercore also acted as financial advisor and Wachtell, Lipton, Rosen & Katz is acting as a legal advisor to Perrigo. J.P. Morgan Securities LLC and BofA Merrill Lynch acted as financial advisors, and Goodwin Procter LLP and Matheson acted as legal advisors to Royalty Pharma.