AstraZeneca and Aspen enter agreement for remaining rights to anaesthetics medicines

Agreement builds on 2016 collaboration on commercialisation
rights to anaesthetic medicines in markets outside the US

AstraZeneca today announced that it has entered into an agreement with Aspen Global Incorporated (AGI), part of the Aspen Group, under which AGI will now acquire the residual rights to the established anaesthetic medicines comprising of Diprivan, EMLA, Xylocaine/Xylocard/Xyloproct, Marcaine, Naropin, Carbocaine and Citanest.

AstraZeneca entered into an agreement with AGI in June 2016, under which AGI gained the exclusive commercialisation rights to the medicines in markets outside the US. Under the terms of the new agreement, AGI will now acquire the remaining rights to the intellectual property and manufacturing know-how related to the anaesthetic medicines for an upfront consideration of $555 million. Additionally, AGI will pay AstraZeneca up to $211 million in performance-related milestones based on sales and gross margin during the period from 1 September 2017 to 30 November 2019. AstraZeneca will continue to manufacture and supply the medicines to AGI during a transition period of up to five years.

Mark Mallon, Executive Vice President, Global Product and Portfolio Strategy, AstraZeneca said: “AstraZeneca, AGI and patients have all benefitted from the successful commercial agreement we established last year. As our relationship has evolved, AGI has shown that it is in a strong position to maximise the value and reach of the anaesthetic medicines through its extensive commercial network. Disposing the remaining rights to the medicines allows both companies to benefit from greater efficiencies as AstraZeneca continues to focus our resources on our three main therapy areas.”

Stephen Saad, Group Chief Executive, Aspen, said: “This second transaction allows AGI to reap the additional benefits from the excellent strategic acquisition that the anaesthetics portfolio has proven to be for Aspen and a key part of this will be to continue leveraging the strong working relationship that AGI has developed with AstraZeneca.”

Financial considerations

Under the terms of the original agreement, entered into in June 2016, AGI made an upfront payment to AstraZeneca of $520 million and agreed to make future Product Sales-related payments of up to $250 million (see first payment below), as well as paying double-digit percentage royalties on Product Sales. AstraZeneca agreed to continue to manufacture and supply the medicines to AGI on a cost-plus basis for an initial period of 10 years.

The new agreement does not impact the first Product Sales-related payment of $150 million due to AstraZeneca, for which the contingent terms have now been met. This income will be recorded as Externalisation Revenue in the Company’s financial statements in the third quarter of 2017.

Under the new agreement, AGI will no longer pay royalties to AstraZeneca. The remaining $100 million Product Sales-related payment from the original agreement will be made to AstraZeneca in 2018, if the contingent terms are met, and will be recorded as Other Operating Income to reflect the reduced ongoing interest in the medicines as a result of the new agreement.

Further, as AstraZeneca will transition the manufacture and supply of the medicines to AGI, and therefore will have a reduced ongoing interest, the $555 million upfront and up to $211 million sales and gross margin-related payments from the new agreement will also be recorded as Other Operating Income in the Company’s financial statements.

The new, additional agreement is expected to close in the fourth quarter of 2017, subject to customary closing conditions and regulatory clearances. It does not impact AstraZeneca’s financial guidance for 2017.

NOTES TO EDITORS

About AstraZeneca

AstraZeneca is a global, science-led biopharmaceutical company that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of diseases in three main therapy areas - Oncology, Cardiovascular & Metabolic Diseases and Respiratory. The Company also is selectively active in the areas of autoimmunity, neuroscience and infection. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.

For more information, please visit www.astrazeneca.com and follow us on Twitter @AstraZeneca.

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