(Bloomberg) Allergan PLC (NYSE:AGN), rebounding from the collapse of its planned merger with Pfizer Inc. (NYSE:PFE), said it will pay $125 million upfront to a unit of Japan’s Sosei Group for rights to a portfolio of treatments for neurological disorders including Alzheimer’s disease.
Dublin-based Allergan said in a statement that it also may pay Heptares Therapeutics as much as $665 million in milestone fees for the successful development and launch of the first three licensed drugs in the agreement. Heptares also could receive as much as $2.5 billion if certain annual sales targets are achieved, and Allergan will commit as much as $50 million to fund research and development.
The pact drove Sosei shares as much as 21 percent higher in Tokyo, putting it on track for its biggest gain in more than three years. Sosei already has partnerships and licensing agreements with companies including AstraZeneca PLC and Novartis AG to develop treatments for conditions from cancer to chronic obstructive pulmonary disease. Tokyo-based Sosei acquired Heptares, a U.K. biotechnology company, last year for as much as $400 million to help diversify revenue and add new potential treatments to its pipeline.
Since the acquisition on Feb. 23 last year, Sosei shares have more than quadrupled.
Heptares has an experimental therapy for Alzheimer’s disease in early-stage clinical testing, as well as other compounds for psychosis, migraines, diabetes and attention-deficit hyperactivity disorder. It uses a drug design technology — called StaR — to target GPCR proteins, which are the site of action of about 40 percent of drugs on the market.
Pfizer Inc. (NYSE:PFE), said in November it would purchase $33 million of newly issued Sosei shares, representing about 3 percent of the total Sosei share capital. Pfizer at the time said it would also enter into a drug-discovery collaboration with Heptares to develop new medicines aimed at a handful of biological targets that may play a role in multiple diseases.
With little more than 100 employees, Sosei’s surge over the past year has meant it now accounts for some 16 percent of the Tokyo Stock Exchange Mothers Index, a startup share gauge on which it’s listed. It’s helped send the measure to a 12 percent gain in 2016 as of last Friday, almost double what it would’ve been if Sosei weren’t around.
In a February interview, Sosei Chief Executive Officer Shinichi Tamura had said the company would announce more partners to develop drugs.
After President Obama’s administration proposed tougher-than-expected new rules aimed at making inversions like the Pfizer-Allergan deal harder to achieve, the two companies announced the termination of their proposed merger on Wednesday. Allergan shares traded up 3.46 percent after the announcement.
Those proposed tax rules won’t affect the sale of Allergan’s generic-drug business to Teva Pharmaceutical Industries Ltd. Allergan will have about $34 billion in cash to spend once the sale is completed.
In a conference call Wednesday detailing Allergan’s “strong standalone growth profile,” chief executive officer Brent Saunders said his company was “prepared and are ready to spring into action on our independent strategies on a go-forward basis.”
Saunders said if the company saw “something that supported the business, supported the R&D, supported our therapeutic presence in one of the seven areas, we can announce it tomorrow.”
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