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Art of the deals
July 2012
by Jeffrey Bouley  |  Email the author


OSAKA, Japan—In a span of less than two weeks, from late May to early June, Takeda Pharmaceutical Co. Ltd. put out word of a plan to acquire Brazilian company Multilab Indústria e Comércio de Produtos Farmacêuticos Ltda. (Multilab) of São Jerônimo, Rio Grande do Sul, even as it geared up to put the finishing touches on its acquisition of Philadelphia-based URL Pharma Inc. in the United States.  
May 25 saw the announcement that wholly owned subsidiary Takeda Farmacêutica Brasil Ltda. of São Paulo, Brazil, would pony up more than $240 million in a cash deal to enhance Takeda's business infrastructure in Brazil. In addition to the upfront payment, the deal calls for as much as $19 million in additional future milestone payments to the owners of Multilab. Takeda expects that the transaction will be finalized by the end of the second quarter of its fiscal year 2012. Other financial conditions were not disclosed, and Takeda has said it doesn't expect to revise earnings guidance for 2012 in connection with this acquisition.  
Takeda already has a presence in Brazil, where it manufactures and markets prescription drugs, in addition to well-known, over-the-counter brands such as the analgesic Neosaldina, the digestive Eparema and the antibacterial Nebacetin. The mid-sized pharma Multilab brings to Takeda a mix of branded generic drugs and over-the-counter pharmaceutical products. Among them is the nation's best-selling (in terms of units sold) over-the-counter cold and flu treatment, Multigrip, which Takeda has indicated it sees as an "excellent addition" to its existing over-the-counter offerings in Brazil.  
In addition to well-recognized products, Multilab also brings with it annual net revenues of roughly $68 million, with even more in store for 2012, perhaps, as Takeda notes that retail sales for Multilab grew in excess of 20 percent per annum from 2009 to 2011.  
"This acquisition significantly reinforces Takeda's position in Brazil, which is the world's sixth-largest economy and the biggest in South America," according to Jostein Davidsen, head of emerging markets commercial operations for Takeda—in fact, the completion of the deal will reportedly put Takeda among the top-10 pharmaceutical companies in Brazil. "Takeda has ambitious plans for growth in emerging markets. Brazil is our second-largest emerging market after Russia/CIS [Commonwealth of Independent States] in terms of revenues, and the acquisition of Multilab is a clear signal of our intention to become a significant player both in Brazil and other high-growth markets."  
Takeda sees the deal as boosting its strategic position in Brazil generally and diversifying its portfolio to better meet the needs of the local market, but the company also sees a chance with this acquisition to better tap the growing emergence of middle-class consumers, it says.  
In turn, Multilab will benefit from joining the Takeda fold by likely reinforcing its market position and reaching more people in Brazil with its key products, notes Hilton Cavedon, executive director of Multilab.
Following the Multilab announcement was the June 5 news release announcing that Takeda, through its wholly owned U.S. subsidiary Takeda Pharmaceuticals USA Inc., had completed its acquisition of URL Pharma Inc. for an upfront payment of $800 million. The deal also includes an agreement for future performance-based contingent earn-out payments.  
The main prize there was Colcrys (colchicine), URL Pharma's leading product for the treatment and prevention of flares associated with gout. The acquisition will result in an immediate increase in revenue with estimated fiscal year 2012 net sales of more than $550 million, most of which comes from Colcrys, which posted more than $430 million in net 2011 sales. As Takeda notes, the acquisition is accretive to both GAAP and non-GAAP operating income immediately and "provides a strong, profitable and long-term source of revenue that complements Takeda's existing U.S. business," with some market-watchers noting more specifically that it will do much to plug the revenue hole from generic competition to Takeda's diabetes drug Actos.  
Colcrys also complements Takeda's existing position in the gout marketplace with Uloric (febuxostat), which is used to lower blood uric acid levels in adults with gout.
"The acquisition of URL Pharma is a meaningful opportunity that delivers on our commitment to strengthen Takeda's presence in the U.S. by adding products that amplify our expertise in primary care," noted Takeda Pharmaceuticals USA President Douglas Cole of the deal. "This commitment allows us to broaden our focus for patients by providing multiple therapeutic offerings for gout, which affects more than 8 million Americans."

Takeda transfers dementia candidate to Tokyo's National University Corporation  
OSAKA, Japan—Takeda Pharmaceutical Co. Ltd. recently finalized a contract to transfer TAK-070, which was previously developed by Takeda as a potential treatment of Alzheimer-type dementia, to the National University Corporation at the University of Tokyo.  
Takeda will receive an upfront payment and a certain rate of royalty from the sales generated through the University of Tokyo if TAK-070 is commercialized. No other financial conditions are disclosed.
TAK-070 was discovered by Takeda, and acts to inhibit the β-secretase enzyme. Amyloid-β-protein is postulated as a fundamental cause of Alzheimer-type dementia, and is produced by the action of β-secretase on Amyloid-β-precursor protein. TAK-070 therefore suppresses the production of amyloid-β protein by inhibiting this β-secretase. The University of Tokyo Hospital is designated by the Ministry of Health, Labour and Welfare as the base for "the national early/exploratory clinical trial project." The project aims to conquer dementia and intractable neurological and psychiatric diseases, and it is preparing to build a system that will enable the continuous conduct of clinical studies ranging from early-stage clinical trials to POC studies by introducing drug candidates from both home and abroad. TAK-070 will be the first new drug candidate to undergo clinical research at this hospital.  
"TAK-070 may possibly prevent or suppress the progression of Alzheimer-type dementia," said Dr. Takeshi Iwatsubo, professor of neuropathology at the university's Graduate School of Medicine. "We will proceeded with clinical research on TAK-070 by using know-how which has been accumulated from the participation in large-scale clinical networks such as J-ADNI for diagnostic imaging and biomarker identification for Alzheimer-type dementia, and contribute to the creation of innovative drugs originating in Japan."  
"Although we chose not to continue the clinical development of TAK-070, Takeda is eager to use all our molecules in any way that can bring benefit to patients, and we believe that transferring TAK-070 to University of Tokyo Hospital is a great way of doing this," said Paul Chapman, general manager of Takeda's Pharmaceutical Research division. "I have great hope that in the near future, the University of Tokyo Hospital will use the great experience they have created at the Unit for Early and Exploratory Clinical Development to develop not only TAK-070, but also other new treatments for patients with Alzheimer-type dementia."
Code: E071205



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