Takeda to sell dry eye drug to Novartis for up to $5.3bn

Takeda has announced it is to sell the dry eye drug Xiidra to Novartis, and a surgical patch to Johnson & Johnson, for a potential total of $5.7 billion as it seeks to pay off debts following its merger with Shire earlier this year.

In order to finance its $40 billion merger with Shire earlier this year, Takeda had to borrow around $31 billion from banks and needs to sell off assets to pay off the debt.

The large debts needed to finance the deal were controversial, with certain shareholders from Takeda's founding family campaigning against the merger because of the high repayments once the deal completed.

Under pressure to cut its borrowing quickly, Takeda has decided to sell former Shire drug Xiidra (lifitegrast) to Novartis in a deal worth up to $3.4 billion up front plus up to $1.9 billion when it achieves certain sales targets.

First approved by the FDA in 2016 for dry eye disease, Xiidra's full year sales were $388 million for the year ended December 2018, and around 400 employees will move to Novartis as part of the transaction.

Meanwhile Johnson & Johnson's Ethicon unit will pay Takeda around $400 million for the TachoSil Fibrin Sealant Patch.

Full year sales for the year ended March 2018 were around $155 million and under the terms of the deal Ethicon will acquire the assets and licenses that support the manufacturing, licensing and marketing of TachoSil, while Takeda will maintain ownership of the manufacturing facility in Linz, Austria.

The products were obvious choices to sell as they don't fit with Takeda's key business areas of gastroenterology, rare diseases, plasma-derived therapies, oncologies and neuroscience.

However Xiidra is a good fit for Novartis, which is already well established in ophthalmology, and J&J thinks TachoSil will work well with its portfolio of medical products.

Takeda said its medium-term target is to cut its debt to around twice its revenues, and said that further sales are likely to follow as it seeks to simplify its portfolio.

[caption id="attachment_23394" align="alignnone" width="117"] Takeda's CEO Christophe Weber[/caption]

CEO Christophe Weber said: "We are working to strategically simplify and optimise our portfolio, while also rapidly deleveraging and continuing to invest in our growth drivers as a global, values-based, R&D-driven biopharmaceutical leader."

Both agreements are due to close in the second half of this calendar year.