WASHINGTON (dpa-AFX) - Elanco Animal Health Inc. (ELAN) announced Monday the sale of certain royalties and commercial milestones associated with XDEMVY (lotilaner ophthalmic solution) 0.25%, for the human health application of lotilaner, to alternative asset manager Blackstone Inc. (BX) for $295 million in cash.
In pre-market activity on the NYSE, Elanco shares were gaining around 2 percent to trade at $9.94.
Under the deal, certain future tiered royalties and commercial milestones associated with lotilaner was bought by funds affiliated with Blackstone Life Sciences and Blackstone Credit & Insurance.
The agreement applies to certain tiered royalties associated with the U.S. net sales of XDEMVY from April 2025 through August 2033 and certain commercial milestones.
The company noted that the monetization of the non-core asset will be used to accelerate debt reduction. Elanco will repay portions of its outstanding term loans on a pro-rata basis, which is expected to reduce interest expense by approximately $10 million. This will be offset by the sale of approximately $10 million of royalties based on Elanco's initial 2025 guidance.
In 2019, Elanco exclusively licensed lotilaner to Tarsus Pharmaceuticals, Inc. (TARS) for exploration as a solution to several unmet human health needs.
In 2023, XDEMVY became the first lotilaner-based product approved for human use and the only FDA-approved medicine for treatment of Demodex blepharitis (DB), a common eyelid disease in humans caused by Demodex mites.
Jeff Simmons, Elanco President and CEO, said, 'Elanco's team of scientific experts is focused on identifying and developing molecules to generate high-impact innovation, not just in our own portfolio, but in adjacent industries to create broader value. As we continue to focus on launching our recent innovation and accelerating our core business sales growth in 2025, this transaction delivers incremental cash that advances our deleveraging goals making high 3x net leverage a real possibility by the end of 2025.'
In the deal, Morgan Stanley & Co. LLC acted as the sole structuring agent.
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