Incyte Corporation has agreed to acquire the European operations of Ariad Pharmaceuticals Inc.. At the close of the transaction, the companies will also enter into a license agreement whereby Incyte will obtain an exclusive license to develop and commercialize Iclusig (ponatinib), a drug to treat chronic myeloid leukemia, in Europe and other select countries.

Under the terms of the license agreement, Incyte will receive an exclusive license to develop and commercialize Iclusig, an BCR-ABL inhibitor with activity against the T315I mutation, throughout Europe and in other select countries. Iclusig is approved in Europe for the treatment of patients with chronic myeloid leukemia and Philadelphia-positive (Ph+) acute lymphoblastic leukemia who are resistant to or intolerant of certain second generation BCR-ABL inhibitors and all patients who have the T315I mutation.

Pursuant to the terms of a share purchase agreement (SPA), Incyte will acquire all shares of ARIAD Pharmaceuticals (Luxembourg) S.a.r.l., the parent company of ARIAD's European subsidiaries responsible for the commercialization of Iclusig in the licensed territory, for a payment to Ariad of $140 million that will be funded by Incyte through available cash on hand. In addition to the SPA, the parties have agreed to enter into a license agreement, upon the closing of the SPA, pursuant to which Incyte will be granted an exclusive license to develop and commercialize Iclusig in the European Union and 22 other countries, including Switzerland, Norway, Turkey, Israel and Russia. Ariad will be entitled to receive tiered royalties of between 32% and 50% on net sales of Iclusig in the territory and up to $135 million in potential development and regulatory milestones for Iclusig in new oncology indications in the territory. ARIAD may also become eligible to receive additional milestones for non-oncology indications, if approved, in the territory. Incyte has also agreed to fund a portion of the ongoing clinical development of Iclusig in Ariad OPTIC and OPTIC-2L clinical trials through cost-sharing payments of up to $7 million in each of 2016 and 2017.

The terms of the license agreement also include an option for an acquirer of Ariad to buy back the rights to Iclusig by repaying the upfront and milestone payments, plus paying an additional amount based on Iclusig sales during the previous 12 months and royalties of 20% to 25% on sales for the remaining royalty term. The buy-back provision cannot be exercised before two years or after six years from the closing of this transaction, and includes a transition period of up to one year.

The transaction is expected to close on or about June 1, 2016, subject to customary closing conditions, and is expected to reduce Ariad’s 2017 annual operating expenses by approximately $65 million. The planned acquisition provides Incyte with a pan-European team of 125 employees, including medical, sales and marketing personnel.

Source: Incyte Corporation