February 27, 2017 / 10:17 PM / 2 years ago

Perrigo sells Tysabri royalty stream, delays annual report

(Reuters) - Drugmaker Perrigo Co Plc (PRGO.N) said on Monday it agreed to sell the royalty stream from its multiple sclerosis drug Tysabri to privately held Royalty Pharma for up to $2.85 billion.

FILE PHOTO: Birds are seen on the logo of generic drugmaker Perrigo Co outside their new factory in the city of Yeruham, in southern Israel March 2, 2016. REUTERS/Amir Cohen

Perrigo said it would delay the filing of its annual report until March, and would review past accounting practices, specifically its historical revenue recognition of its Tysabri sales.

The company also said its chief financial officer, Judy Brown, was stepping down, to be replaced by an interim finance head.

Brown will join Amgen Inc (AMGN.O) to serve as a senior vice president in charge of global business services and finance, Amgen said. The current senior vice president of global business services, Michael Kelly, is retiring, Amgen added.

Brown is positioning herself to succeed Amgen’s current chief financial officer, David Meline, 59, when he eventually retires, according to people familiar with the matter.

The deal with Royalty Pharma comprises $2.2 billion in cash at closing and up to $650 million in potential milestone payments, according to a statement by Perrigo, which confirmed an earlier Reuters report about the agreement.

Perrigo also announced that it might sell a unit focused on making drug ingredients and said it expects to reduce its global nonproduction workforce by 14 percent, or 750 employees.

The sale of Tysabri follows Perrigo’s settlement this month with activist hedge fund Starboard Value LP. Starboard, which won Perrigo board representation as part of the settlement, had been advocating for the company to sell assets to unlock value for shareholders.

Perrigo’s stock is down more than 50 percent since its highs in late 2015, when it was fending off unwanted takeover interest from generic drugmaker Mylan NV (MYL.O).

Perrigo succeeded in convincing investors to shun the bid, in part by citing the its potential to perform well on a standalone basis.

Since then, Perrigo has largely disappointed investors, reducing earnings guidance on more than one occasion in response to pressure on its generics drug business and disappointing performance of its Omega Pharma business, which it acquired for $4.5 billion in 2014.

Last year, Perrigo’s former chief executive officer, Joseph Papa left the company for a job at specialty drugmaker Valeant Pharmaceuticals International Inc VRX.TO. He was replaced by Perrigo veteran John Hendrickson.

Additional reporting by Bill Berkrot in New York; editing by David Gregorio

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