As a result of Novartis’ withdrawal of the MAA for Xiidra, Takeda expects that the probability of receiving certain sales-based milestones may be reduced, although the total potential milestone receipts of up to $1.9 billion remain unchanged.
OSAKA: Takeda Pharmaceutical Company Limited announced the anticipated financial impact from Novartis Europharm Limited’s withdrawal of the Marketing Authorisation Application (MAA) for Xiidra in Europe, as posted on the European Medicines Agency’s website on June 26, 2020.
Xiidra is the first and only prescription treatment approved by the U.S. Food and Drug Administration for both signs and symptoms of dry eye disease, with a mechanism of action that targets inflammation. It was one of the products obtained through the acquisition of Shire plc by Takeda in January 2019. In July 2019, Takeda completed the sale of Xiidra to Novartis for a sales price of $3.4 billion upfront in cash and up to an additional $1.9 billion in potential milestone receipts, including certain sales-based milestones.
As of March 31, 2020, Takeda had recognized a financial asset of approximately $850 million on its Consolidated Statements of Financial Position based on the estimated fair value of the contingent consideration related to these potential milestone receipts.
Takeda will remeasure the financial asset to its estimated fair value as at June 30, 2020. As a result of Novartis’ withdrawal of the MAA for Xiidra, Takeda expects that the probability of receiving certain sales-based milestones may be reduced, although the total potential milestone receipts of up to $1.9 billion remain unchanged.
As a result of the remeasurement, Takeda anticipates that it will recognize a loss of approximately $200 million in Reported Operating Profits resulting in a loss of approximately $150 million in Reported Net Profit attributable to owners of the Company for the three-month period ending June 30, 2020. The amounts will be finalized as part of Takeda’s quarter-end procedures in connection with its results for the three-month period ending June 30, 2020, and the actual loss may be higher or lower as a result.
The final impact for the three-month period ending June 30, 2020 will be disclosed in due course, after it becomes available.
Since the impact to Takeda of Novartis’ withdrawal of the MAA represents a loss related to the divestment of a non-core business, it will impact reported profit, but will not impact Core Operating Profit or Core Net Profit.
In addition, there will be no material negative impact on cash flows or Adjusted EBITDA. Takeda will continue to assess the impact of the MAA withdrawal and other factors and will update its forecast for the fiscal year ending March 31, 2021 at the appropriate timing. Finally, Takeda remains committed to $10 billion of divestitures of its non-core assets, and this announcement does not impact this commitment.
