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AstraZeneca divests US Synagis rights to Sobi

pascal-soirot

AstraZeneca has agreed to sell US rights to Synagis (palivizumab) used for the prevention of serious lower respiratory tract infection (LRTI) caused by respiratory syncytial virus (RSV) to Swedish Orphan Biovitrum AB (Sobi).

Sobi will commercialise Synagis in the US and around 130 AstraZeneca employees will transfer to Sobi as part of the transaction.

Sobi will also have the right to participate in AstraZeneca’s share of US profits and losses related to potential new medicine MEDI8897. AstraZeneca will continue to develop MEDI8897 in collaboration with Sanofi Pasteur, the vaccines division of Sanofi S.A.

“We continue to streamline our portfolio, allowing AstraZeneca to allocate resources more effectively, while Sobi’s focus on Synagis will enable infants in the US to continue benefiting from this important treatment. Meanwhile, the successful development and commercialisation of MEDI8897 remains important for AstraZeneca,” said Pascal Soriot, Chief Executive Officer.

Financial considerations

Under the agreement, AstraZeneca will receive an upfront consideration of $1.5bn, consisting of $1.0bn in cash and $500m in ordinary shares of Sobi upon completion. This would equate to an ownership interest of 8%, based on the current Sobi share price. AstraZeneca has undertaken not to sell the shares received as consideration for a period of 12 months following the closing date of the transaction. The cash proceeds from the transaction will be used for general corporate purposes.

AstraZeneca will also receive up to $470m in sales-related payments for Synagis, a $175m milestone following the submission of the Biologics License Application for MEDI8897; potential net payments of approximately $110m on achievement of other MEDI8897 profit and development-related milestones; and a total of $60m in non-contingent payments for MEDI8897 during 2019-2021. Under the agreement, Sobi will have the right to participate in payments that may be received by AstraZeneca from the US profits or losses for MEDI8897. The agreement is subject to customary closing conditions and is currently expected to complete very early 2019. AstraZeneca will provide additional information if closing conditions are achieved earlier and the agreement can complete late 2018.

Net income attributable to the arrangements will be recorded in the company’s financial statements upon completion as Other Operating Income. As part of the agreement, AstraZeneca will de-recognise on a proportionate basis a significant intangible asset related to Synagis. The transaction does not impact the company’s financial guidance for 2018.

For the purposes of the UK Listing Authority’s Listing Rule LR 10.4.1 R (Notification of class 2 transactions), the total book value of gross assets attributable to the RSV franchise were $2.2bn at 31 December 2017, of which approximately $1.0bn was attributable to Synagis in the US. In the year to 31 December 2017, the pre-tax profits attributable to Synagis in the US were approximately $118m.