PDL BioPharma acquires Depomed royalty, milestone rights portfolio

INCLINE VILLAGE, Nev.—PDL BioPharma Inc. has announced the acquisition of a portfolio of rights to receive royalties and milestones on sales of type 2 diabetes products licensed by Depomed, for which it paid $240.5 million in cash. PDL will receive all royalty and milestone payments due under the agreements until it has received payment equivalent to twice the amount of its payment to Depomed, at which point the two companies will share all payments received equally.

PDL BioPharma now holds the rights to Depomed’s royalty and milestone payments accrued starting and after October 1 for the following: from Santarus on sales of Glumetza in the United States; from Merck on sales of Janumet XR; from Janssen Pharmaceutica regarding potential future development milestones and sales of its investigational fixed-dose combination of Invokana and extended-release metformin; from Boehringer Ingelheim related to potential future development milestones and sales of the investigational fixed-dose combinations of drugs and extended-release metformin related to Depomed’s license agreement with Boehringer Ingelheim; and from LG Life Sciences and Valeant Pharmaceuticals for sales of extended-release metformin in Korea and Canada, respectively.

“The acquisition of Depomed’s diabetes royalty rights is a significant addition to our income generating assets,” John McLaughlin, CEO of PDL BioPharma, said in a press release. “This acquisition allows PDL to participate in a potentially lengthy, diversified stream of royalties on products in different classes across the diabetes area. Our goal is to be the financial partner of choice to leading life-science companies and other institutions seeking to access non-dilutive capital by monetizing their royalty assets, and we are actively looking to expand our portfolio.”

Glumetza has been licensed by Depomed to Santarus Inc., and PDL will receive Depomed’s royalties on net sales of the product of 32 percent for the rest of this year and all of 2014. In 2015 and beyond, PDL will receive 34.5 percent. Should a generic version of Glumetza enter the U.S. market, PDL and Santarus will split proceeds equally based on a gross margin split.

With regards to Janumet XR, PDL will receive Depomed’s low-single-digit royalty on Merck’s net sales of Janumet XR in the United States and other licensed territories through the expiration of the licensed patents related to Depomed’s license arrangement with Merck.

PDL’s acquisition also includes rights to royalties and milestones on products being developed by Boehringer Ingelheim and Janssen Pharmaceutica. Boehringer Ingelheim holds worldwide rights to Depomed’s Acuform delivery technology for the development and commercialization of certain fixed-dose combination products, and subject to clinical development and product approval, PDL could receive Depomed’s milestone payments contingent upon regulatory filings and approval events, in addition to royalties on worldwide net sales of products. For its part, Janssen Pharmaceutica holds worldwide rights to Acuform delivery technology for the development and commercialization of a fixed-dose combination formulation of Invokana, a Sodium Glucose Transport 2 inhibitor and extended-release metformin. Dependent upon clinical development and product approval, PDL stands to receive Depomed’s milestone payments and royalties on worldwide net sales of products that Janssen sells under the Depomed license.

SOURCE: PDL BioPharma press release