(Reuters) - Medicines Company, a maker of drugs used in hospitals, will spend about $300 million in two deals to bulk up its surgical care products portfolio.
The company will pay $105 million upfront for a two-year license to market Bristol-Myers Squibb Company’s device to control bleeding during surgery.
Medicines Co also said it agreed to pay $185 million to acquire privately held Incline Therapeutics, which is developing a device to manage post-operative pain.
“Both assets fit well with Medicines Co’s current hospital franchise. It follows the company’s historical ability to bring in interesting assets that may need further work, but can be picked up at a reasonable price because they could need more development,” RBC Capital Markets analyst Adnan Butt said.
The deal with Bristol gives Medicines Co the option to acquire the device, Recothrom, for a price based on average net sales during the two-year collaboration term.
Bristol recorded net revenue of $65 million from the Recothrom sales in the United States and Canada in 2011. It will be the manufacturer and sole supplier of Recothrom during the deal term.
Medicines Co would also pay an upfront option fee of $10 million to Bristol and tiered royalties on annual net revenue of the device during the term.
The deal is expected to add to Medicines Co’s earnings per share in 2013, and add minimally to Bristol’s earnings per share in 2013 and 2014, both companies said in a joint statement.
Redwood City, California-based Incline is developing a patient-controlled analgesia system called IONSYS for short-term management of acute post-operative pain in hospitals. The device was launched in Europe, but recalled later on stability issues.
“We expect that if we obtain IONSYS approval, we could launch IONSYS in early 2014 in the United States and soon thereafter in Europe,” Medicines Co’s Chief Financial Officer Glenn Sblendorio said.
San Diego, California-based Cadence Pharmaceuticals Inc had an exclusive option to buy Incline, which it ended on Wednesday.
Cadence said it will receive about $13 million for the termination of its agreement with Incline.
Medicines Co will also pay about $1.5 million to buy out Cadence’s holdings in Incline and potentially a pro rata share of future milestone payments, Cadence said.
Medicines Co’s shares closed at $21.85 on Tuesday on the Nasdaq.
Reporting by Zeba Siddiqui in Bangalore; Editing by Roshni Menon