Roche Holding moved Monday to boost flat sales at its flagship drugs business and strengthen its hepatitis C franchise by licensing a promising drug from Costa Mesa-based ICN Pharmaceuticals Inc.
Acting on its plan to tap rivals' products to fill gaps in its near-term development pipeline, Roche said it bought the rights to levovirin, an experimental drug for treating the viral infection that afflicts about 170 million people.
Roche said levovirin would complement its own hepatitis C drug, Pegasys, which is bogged down in the U.S. regulatory review process.
"Its use in combination with levovirin is expected to set new standards of care in this therapeutic area," the Swiss company said.
Levovirin is to be a follow-up drug to ICN's leading product, ribavirin, an anti-viral agent. Schering-Plough Corp, which uses ribavirin in its hepatitis C treatment Rebetron, had the right to match or better rival Roche's offer for levovirin.
Roche will continue the development of levovirin and handle global marketing and distribution. It will pay an unspecified one-time license fee plus further amounts after certain targets have been reached and the drug has won marketing approval.
In return, Roche will offer ICN a drug in a similar developmental stage. Levovirin started Phase I clinical trials in February after preclinical tests suggested it produced fewer undesirable side effects than did ribavirin.
"If levovirin works, I think it could be bigger than ribavirin," said Richard Stover, an analyst at Arnhold & S. Bleichroeder.
ICN also said Monday it plans a private sale of $250 million of seven-year convertible subordinated notes.
The company said it plans to use proceeds to redeem debt and for general corporate purposes, including possible acquisitions. It said it may sell an additional $50 million of notes if there is enough demand.
ICN said the debt refinancing is required for its plan to split into three entities: biotechnology company Ribapharm Inc.; ICN International, including its European, Asian, African and Australian businesses; and ICN Americas, including its North American businesses.
Creditors hold about $510 million in long-term debt. ICN recently said it would pay down $200 million in debt by August. ICN would then pay off the bulk of the debt from cash flow and from spinning off as much as 40% of its international unit.
ICN's stock rose 2 cents a share to $31.74 on the New York Stock Exchange. The company announced the sale after regular U.S. trading hours.
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Road to Recovery?
ICN stock is off its 52-week high reached in fall of 2000 but up almost 13% since the beginning of the year.
Monthly closes and latest for ICN Pharmaceuticals
Monday: $31.74, up 2 cents
Source: Bloomberg News