Canada's QLT sells US unit to TOLMAR for up to $230 million; aims to concentrate to ocular therapy

Vancouver, Canada-headquartered QLT Inc says that it has completed the sale of all of the shares of its wholly-owned US subsidiary, QLT USA Inc, to TOLMAR Holding, for up to an aggregate $230 million. QLT USA's principal operating asset is the Eligard (leuprolide) line of products for the treatment of prostate cancer, which is currently manufactured by TOLMAR.

When QLT released its second-quarter results in July, the company had raised its 2009 forecast for Eligard sales to $240 million-$255 million from its previous forecast of $220 million-$240 million, citing strong sales in the first half of the year.

Under the Stock Purchase Agreement, QLT received $20 million on closing and will get $10 million on or before October 1, 2010 and up to an additional $200 million payable on a quarterly basis in amounts equal to 80% of the royalties paid under the license agreements with each of Sanofi-Synthelabo (now French drug major Sanofi-Aventis) and MediGene AG for the commercial marketing of Eligard in Canada, the USA and Europe (beginning with the royalties payable for Eligard sales that occurred in the quarter ended September 30, 2009) until the earlier of QLT receiving the additional $200 million or the expiry of the Stock Purchase Agreement on October 1, 2024.

In addition, TOLMAR will pay QLT a further amount for the shares of QLT USA equal to the balance of cash that this unit had on-hand at closing, substantially all of which had been reflected in QLT's consolidated balance sheet at June 30, 2009. The net after-tax proceeds of this transaction are expected to be approximately $230 million, assuming the entire additional US$200 million is paid.

"Eligard has been a very strong revenue stream for us and we believe this deal reflects the robustness of the Eligard franchise," said Bob Butchofsky, chief executive of QLT. "This is the last asset sale in a series of divestments and licensing agreements that the company commenced in early 2008. As a result, we are very pleased to have completed our transition into a company focused solely in the ocular therapeutic area," he added.