Quest Diagnostics sells ibrutinib royalty rights for $485 million

USA-based diagnostic services firm Quest Diagnostics (NYSE: DGX) says it has completed the sale of its rights to royalties from commercialization of the drug candidate ibrutinib to Royalty Pharma (recently involved in a failed hostile bid for Irish drugmaker Elan Corp; The Pharma Letters passim), the industry leader in acquiring royalty interests in marketed and late stage biopharmaceutical products, for $485 million in cash.

"This transaction is consistent with our strategy to refocus on our core diagnostic information services business," said Steve Rusckowski, Quest Diagnostics president and chief executive, adding: "The ibrutinib royalty rights were not core to our business. After considering interest in ibrutinib, we conducted a robust market process, and believe that selling now is in the best interests of our shareholders. We expect to use the proceeds to drive shareholder value, consistent with our capital deployment strategy."

The sale is expected to result in after tax cash proceeds of around $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.