- Takeda is divesting its dry eye drug Xiidra to Novartis for $3.4 billion upfront and the potential for $1.9 billion in additional milestone payments.
- The deal, first reported by Bloomberg and announced shortly after by Takeda, is expected to close in the second half of this year. The Japanese pharma expects around 400 employees, who are mostly based in the U.S. and Canada, will move over to Novartis once the deal wraps up.
- Xiidra came into Takeda's portfolio through the recent $62 billion acquisition of Shire. The first and only drug approved in the U.S. for the signs and symptoms of dry eye, Xiidra last year had $388 million in adjusted net sales.
Takeda and Novartis see their eye drug businesses going in two different directions.
For the former, ophthalmology isn't a priority. Takeda suggested as much in announcing its Shire acquisition, noting how 75% of the combined company's sales would come from five areas: oncology, gastroenterology, rare diseases, neuroscience and plasma-derived therapies.
Takeda reaffirmed its dedication to those areas by selling Xiidra (lifitegrast), which came concurrently with the announcement that Johnson & Johnson's Ethicon subsidiary will buy Takeda's TachoSil surgical patch for approximately $400 million. The two transactions, both in cash, will help pay down the massive debt burden created by the Shire takeover.
"These initial divestitures represent important steps in advancing the growth strategy Takeda outlined following our transformational acquisition of Shire earlier this year," CEO Christophe Weber said in a May 8 release.
"We are working to strategically simplify and optimize our portfolio, while also rapidly deleveraging," he added.
Novartis, on the other hand, has continued to invest in ophthalmology pharmaceuticals.
In early 2018, it licensed Luxturna (voretigene neparvovec), a gene therapy for a rare retinal condition, from the now Roche-owned Spark Therapeutics. Novartis CEO Vas Narasimhan said on an earnings call in January that his company remains interested in gene therapy, with a focus on ophthalmology.
The Swiss pharma giant also recently used a priority review voucher — a kind of regulatory fast pass that in some instances has sold for hundreds of millions of dollars — on an investigational drug for wet age-related macular edema. If the drug gains approval, Novartis anticipates launching it later this year.
While ophthalmology sits as the second largest sales area in Novartis' Innovative Medicines unit, its performance hasn't been so strong in recent quarters. Generic competition to the company's glaucoma and anti-infective portfolios caused a 2% decline in ophthalmology for 2018.
That decline was in spite of growth from Lucentis (ranibizumab), a blockbuster Roche brand that Novartis sells outside the U.S. Novartis recorded $533 million worth of net sales for Lucentis in the first quarter, a 10% increase year over year under constant currency.
Novartis now expects the Xiidra acquisition to bolster its front-of-the-eye portfolio.
"In addition to powering Novartis' ability to serve more patients suffering from eye disease, the additional commercial experience established with Xiidra is expected to better position the company for front-of-the-eye pipeline products currently in development," the Swiss drugmaker said in its own announcement.