Quest Diagnostics Closes Sale Of Ibrutinib Royalty Rights To Royalty Pharma

(RTTNews) - Quest Diagnostics Inc. (DGX) announced that it has completed the sale of its rights to royalties from commercialization of the drug candidate ibrutinib to Royalty Pharma for $485 million in cash.

Quest said it expect to use the proceeds to drive shareholder value, consistent with its capital deployment strategy.

The sale is expected to result in after tax cash proceeds of approximately $300 million, before associated transaction costs. The gain associated with the sale will be recorded in the third quarter and will be excluded from adjusted earnings.

As part of its acquisition of Celera in 2011, Quest Diagnostics gained rights to royalties on ibrutinib, an experimental cancer therapy currently in Phase III development by Pharmacyclics (PCYC) and Johnson & Johnson (JNJ), through its Janssen Biotech subsidiary. Ibrutinib is an inhibitor of the enzyme Bruton's tyrosine kinase or BTK.

Quest Diagnostics stated that it continues to retain royalty rights to other clinical indications that result from Celera's drug assets, including programs that target histone deactylase, or HDAC, selective HDAC enzymes and Factor VIIa, as well as other BTK compounds. In addition, Quest continues to hold the cathepsin K intellectual property licensed by Celera to Merck for the drug odanacatib. All of these agreements pertain to drugs that have not yet been commercialized. Quest Diagnostics has not yet received any royalty payments related to these programs.