Valeant Pharmaceuticals International, Inc.
) recently announced that it has acquired
) Visudyne. To acquire the US rights to Visudyne and the available
inventories, Valeant has made an upfront payment of $62.5 million.
The company paid another $50 million for the royalty rights to
Visudyne's ex-US sales and will assume the responsibility of
supplying Visudyne for ex-US sales.
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We note that QLT had an agreement with
) for the commercialization of Visudyne in ex-US territories.
Novartis is obligated to pay a royalty of 20% of ex-US sales of
Visudyne till 2014 and thereon 16% till 2019.
Under the terms of the agreement, Valeant will make contingent
payments of $5 million for the development of QLT's laser program
in the US. Valeant has also agreed to contingent payments of up to
$15 million for ex-US royalties.
Visudyne is used for treating abnormal growth of leaky blood
vessels in the eye caused by wet age-related macular degeneration.
In 2011, Visudyne generated revenues of approximately $21 million
in the US and the ex-US royalties recorded by QLT during that
timeframe were approximately $14 million. We expect the deal to be
accretive for Valeant.
We note that Valeant is on an acquisition spree to expand its
business. Earlier this month, the company announced its intention
Medicis Pharmaceutical Corporation
) for $44.00 per share in cash. The deal value is estimated to be
approximately $2.6 billion. The transaction is expected to be
completed in the first half of 2013.
We currently have a Neutral long-term recommendation on Valeant.
The stock carries a Zacks #3 Rank (Strong Hold rating) in the short