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Takeda sells blockbuster-in-waiting Xiirda to Novartis for $5.3bn

Will help cut Shire acquisition debt

Takeda

Novartis has snapped up Takeda’s blockbuster-tipped Xiidra, paying $3.4bn for the rights to the dry eye drug and acquiring with it 400 Takeda employees.

The deal, which in total is worth $5.3bn, makes sense for both companies; Takeda is looking to shed some of its debt, which is around $31bn. The drug was acquired in its recent buyout of Xiidra’s maker Shire, while a leaner Novartis hopes to strengthen its prescription medicine eye disease portfolio after spinning off consumer health eye care division Alcon earlier this year.

As such, the Swiss drugs giant has promised potential milestone payments of up to $1.9bn for the drug, which is the first and only prescription treatment approved to treat both signs and symptoms of dry eye by inhibiting inflammation caused by the disease.

Xiidra was first launched in the US in 2016, and generated sales of around $400m last year. It fits with Novartis’ plan of focusing on medicines that are first-in-class or breakthrough therapies to help offset generic competition to its intraocular hypertension drug Travatan and antihistamine Pataday.

These drugs saw its eye-disease portfolio drop 1% in sales over the previous year to $4.56bn, but it hopes this won’t be a similar pattern with Xiidra expected to generate sales of $1.2bn in 2025, according to GlobalData.

"Xiidra, with its unique dual benefits, is an example of the type of innovative advances we invest in for the benefit of patients," said Paul Hudson, CEO Novartis Pharmaceuticals. "We look forward to leveraging our well-established commercial infrastructure to bring this medicine to more patients”

Novartis said the commercial experience established with Xiidra will better position the company for upcoming front-of-the-eye products that are in development, such as its phase 2 ophthalmic drug ECF843

Expected to close the second half of 2019, the deal follows Takeda’s  divestment of up to $10bn in non-core assets due to offset the costs of the takeover.

GlobalData analyst Maura Musciacco comments: “Now that Takeda has completed the acquisition of Shire, it comes as no surprise that the Japanese pharma company has divested Xiidra to Novartis in an effort to cut debt. Given that Takeda did not have a presence in ophthalmology prior to the Shire acquisition, Shire’s Xiidra would have represented a new market for Takeda, but also a market that does not fit with its current competencies or strategy.”

“When the Takeda-Shire deal was first announced in April 2018, there were some concerns that Takeda may not have been able to afford this purchase, as it had only $4.3bn in cash at hand, and the deal could have over-stretched its finances. As a result, Takeda had to take on a significant amount of debt to afford its pricy takeover of Shire, and rumours of potential divestments were immediate, seeing Shire’s ophthalmology portfolio as a good candidate for this.”

Meanwhile, Takeda has also confirmed it will sell its TachoSill surgical patch designed to control bleeding to Ethicon, a Johnson & Johnson subsidiary, for $400m along with 85 more Takeda employees.

10th May 2019

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