21-07-2010: MediGene AG announces the sale of full European marketing and distribution rights to Eligard® (leuprolide acetate, for the treatment of hormone-dependent prostate cancer) to Astellas Pharma Europe Ltd., previously MediGene's European marketing partner for Eligard®. MediGene acquired these rights from TOLMAR Therapeutics Inc. (formerly Atrix Laboratories Inc.) in 2001. In return for the Eligard® license, MediGene will receive EUR 25 million in cash from Astellas as well as royalties on future product sales. For MediGene, all future costs, obligations and risks associated with the supply of Eligard® to Astellas, as well all future procurement costs and license payments to TOLMAR, will cease within the next months.
This agreement will strengthen MediGene's financial situation and provide the opportunity for MediGene to profit from future growth of Eligard® sales. This would not be possible under the former deal structure since MediGene's net margin decreased once net sales by Astellas exceeded a certain threshold, capping royalty receipts.
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 totalled about 6%. In future, MediGene will receive about one third of this margin on Eligard® in-market sales. According to the contract, Astellas will pay EUR 25 million in three tranches as the steps of transfer of the rights are concluded over the next six to twelve months (EUR 5 million upon signature, EUR 15 million anticipated within six to eight months, EUR 5 million anticipated within six to twelve months).
Arnd Christ, MediGene's CFO, commented: "This is an excellent deal for MediGene, both in financial and strategic terms. It not only reflects the full NPV of all future Eligard® revenues according to the previous deal structure, but also provides us with significant and non-dilutive financing in a very tough capital markets environment. Furthermore, 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. The significant improvement of our balance sheet and the simplification of the Eligard® deal structure allow us to fund growth opportunities and thus strengthening the future pipeline of the company."
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