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Clinigen snaps up rights to Novartis cancer drug in a deal worth up to US$210mln

"This highly earnings enhancing acquisition of US rights to Proleukin is significant to the whole group, not just the commercial medicines division,” said chief executive Shaun Chilton

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The growing speciality pharma group already sells Proleukin outside America

Clinigen Group PLC (LON:CLIN) has struck a deal that will cost it up to US$210mln to acquire the US rights for a cancer drug from Swiss giant Novartis.

The growing speciality pharma group already sells Proleukin outside the US.

Shares surged on the back of the US rights acquisition. They were up almost 20% to 881.5p late on Wednesday, valuing the AIM company at almost £1.2bn.

READ: Clinigen to report sharp jump in revenue and profit after busy six months

The nuts and bolts of the deal will see Clinigen pay an initial US$120mln for the product, which is used to treat the most pernicious forms of melanoma and renal cell carcinoma.

A further US$60mln will be deferred for a year with the remainder paid based on hitting certain sales milestones.

In the US, Proleukin, which Clinigen says has the potential to become an integral part of cancer combination therapies, generated sales of US$60mln last year. Gross profit margins on the treatment are expected to be similar to those of the company’s existing portfolio in the medicines division.

As for the impact of the deal on the firm’s finances, it is expected to be modestly earnings accretive in the current year and add at least 25% to EPS in the first full 12 months as part of the Clinigen portfolio.

"This highly earnings enhancing acquisition of US rights to Proleukin is significant to the whole group not just the commercial medicines division,” said chief executive Shaun Chilton.

The company said it has increased its debt facility to US$484mln from US$387mln.

In an update on trading, Clinigen said underlying earnings (adjusted EBITDA) have grown 22% on a reported basis in the six months to December 31.

-- Adds share price --

Quick facts: Clinigen Group PLC

Price: 980.52 GBX

AIM:CLIN
Market: AIM
Market Cap: £1.3 billion
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