Two years ago, Quest Diagnostics ($DGX) picked up Celera and its gene-based testing tech for $344 million, net of cash and investments. And today it cashed in a lottery ticket it picked up in the deal, selling the royalty rights Celera held for the breakthrough cancer drug ibrutinib for $485 million.
Royalty Pharma, one of the busiest players in this niche field, snapped up the rights for ibrutinib, a Phase III cancer drug being developed by Pharmacyclics ($PCYC) and Johnson & Johnson ($JNJ) that holds three breakthrough drug designations from the FDA. The BTK inhibitor is one of the industry's top drugs in late-stage development and has been widely tapped as a potential blockbuster with multibillion-dollar revenue potential. Today's deal will only throw some more gas on the speculative fire.
Quest says the royalty rights to ibrutinib really weren't a core asset. According to a recent SEC filing, Pharmacyclics explained that it owed Celera a single-digit royalty on ibrutinib. Now Quest can use the windfall to back up its diagnostics work.
Quest's timing would seem to be near perfect. Investors have swarmed over Pharmacyclics in the past year, bidding up shares as ibrutinib appears to be nearing the first in a series of FDA approvals. And that heated environment helped boost the value of Quest's shares.
"We are pleased to have had an opportunity to work with Quest in this win-win transaction, in which Quest was able to dispose of a non-core asset as part of its strategic plan and we were able to acquire an interest in ibrutinib, an exciting potential therapy addressing the needs of patients with chronic lymphocytic leukemia, small lymphocytic lymphoma and mantle cell lymphoma," said Pablo Legorreta, the CEO of Royalty Pharma.
- here's the press release
- get more on Quest's Q2 results from FierceMedicalDevices
'Breakthrough' ibrutinib NDA makes rapid arrival at FDA
Quest Diagnostics snags Celera in $344M buyout