Insmed Inc., a developer of follow-on biologics and biopharmaceuticals focused on niche markets with unmet medical needs, announced that it has entered into a definitive agreement with Merck & Co., Inc. whereby Merck, through an affiliate, will purchase all assets related to Insmed's follow-on biologics platform.
Under the terms of the agreement, Insmed will receive a total of $130 million for the assets. After fees, taxes and other costs related to the transaction, Insmed expects net proceeds of approximately $123 million as a result of this agreement.
As part of this transaction, Insmed will receive initial payments of up to $10 million for Insmed's lead follow-on-biologic candidates and the remaining balance upon closing of the transaction, which is targeted for March 31, 2009. These initial payments will allow the Company to maintain its normal business operations throughout the closing period without the need for dilutive financing.
Insmed's follow-on biologics assets include INS-19 and INS-20, whose development and commercial rights will now belong to Merck, as well as the Boulder, Colorado-based manufacturing facility. Merck intends to assume the facility's lease and ownership of all the equipment in the building. In addition, upon closing of the transaction, Merck intends to offer positions to employees of the Boulder facility. Insmed will retain its Richmond, VA corporate office, which houses its Clinical, Regulatory, Finance, and Administrative functions, in support of the continuing Iplex programme.
"We have long maintained that our follow-on biologics assets hold substantial value, and this agreement with Merck, one of the largest pharmaceutical companies in the world, is a testament to that value," said Dr. Geoffrey Allan, president and CEO of Insmed. "We are pleased that over the past two years our team has been successful in developing such a valuable asset, which, as a result of this agreement, will generate a substantial return to the company."
"This transaction will transform and strengthen our balance sheet in a completely non-dilutive fashion, and provides us with substantial financial flexibility in a market where cash, especially for small biotech companies, is scarce," continued Dr. Allan.
The proceeds from the transaction will be used to support the continued development of Iplex, and the company will carefully evaluate other options, which could include the distribution of a portion of the cash to shareholders.