Revised terms for ViiV Healthcare and Shionogi HIV partnership

UK pharma giant GlaxoSmithKline (LSE: GSK) says that Healthcare, its HIV/AIDS joint venture with Pfizer, and Japanese drug major Shionogi (TYO: 4507) have revised their joint venture partnership for the development of integrase inhibitors, effective 31 October, 2012.

Under the deal, ViiV Healthcare will acquire exclusive global rights to Shionogi-ViiV Healthcare joint venture assets including dolutegravir and other early-stage integrase inhibitor compounds. Shionogi will be eligible for ongoing royalty and dividend stream and will receive 10% equity in ViiV Healthcare.

As a result of the transaction, ViiV Healthcare will record: 100% of the net sales of the assets previously owned by the JV; all operating costs; estimated value of all assets and obligations including estimated value of future royalty payments in GSK’s balance sheet; and a portion of ViiV Healthcare’s after-tax profit attributable to the non-controlling interest of Pfizer and Shionogi in GSK’s income statement. The transaction is expected to result in a non-cash accounting gain in GSK’s fourth-quarter 2012 non-core results.