Astellas' patent sale gains $609M for new round of dealmaking

Japan's Astellas has sold off a patent portfolio on diabetes drugs it obtained in the OSI Pharmaceuticals buyout, raising $609 million that it plans to use for a new round of dealmaking. Royalty Pharma gains valuable patents on DPP-IV inhibitors for Type 2 diabetes and Astellas gets a fresh injection of cash that can be used to snare new technologies for its core diseases: urology, transplant-related medicines, infectious diseases and cancer treatments.

"The sale of this large, passive, non-core financial asset will free up capital for reinvestment in strategic initiatives," said Astellas CEO Yoshihiko Hatanaka. And Royalty Pharma CEO Pablo Legorreta touted his interest in doing more deals like this; exchanging cash for some of the assets snagged in buyouts that can then be used for more wheeling and dealing.

"By partnering with Royalty Pharma, acquirers can reduce the amount of capital spent to acquire strategic, value-creating assets and, in doing so, preserve capital to fund other strategic acquisitions or its internal pipeline," he said. "This transaction fits squarely within this strategy."

Astellas may not be finished with raising money from the diabetes technologies it gained from OSI, which it acquired for $4 billion primarily because of its cancer work. There's a pair of drug candidates for diabetes and obesity that Astellas still owns from the buyout which it's currently "reviewing" strategic alternatives on. Typically that's code for plans to auction off the assets to the highest bidder.

- check out the Astellas release