By Maria Armental 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 9, 2019).

Takeda Pharmaceutical Co., looking to pay down debt following its megadeal for Shire PLC and narrow its focus, is selling eye drug Xiidra to Novartis AG and TachoSil surgical patches and sealants to Johnson & Johnson's Ethicon.

The deals, expected to close in the second half of the year, would bring Takeda $3.8 billion in cash up front and up to $1.9 billion in additional payments from Novartis subject to certain milestones being met, the companies said Wednesday.

Japan's Takeda has said it would sell about $10 billion worth of assets to pay down debt.

Xiidra, which Takeda acquired as part of its January purchase of drugmaker Shire, generated about $400 million in revenue last year and is seen as a potential blockbuster drug. It competes with Allergan PLC's No. 2 selling drug Restasis, which generated nearly $1.3 billion in sales in 2018, much of which came from the U.S.

The eye-drop solution for dry-eye disease is approved for sale in the U.S., Canada and Australia and under regulatory review in additional markets.

As part of the agreement, about 400 workers associated with Xiidra in the U.S. and Canada would join Novartis, the company said.

Bloomberg reported earlier Wednesday that Novartis was considering a bid for Xiidra.

As part of the deal with J&J, about 90 workers would join Ethicon. But Takeda would continue to own a manufacturing site in Linz, Austria, and make the TachoSil products for Ethicon under a long-term agreement, Takeda said.

TachoSil generated about $155 million in sales in the year ended March 31, 2018, Takeda said.

Takeda is scheduled to report financial results for the most recent year next week.

Moody's Investors Service and S&P Global Ratings have cut Takeda's credit ratings, citing a heavy debt load following the company's Shire deal. Both firms said the deal drove a ratio of debt to earnings well above that of pharmaceutical peers.

The company said Wednesday it is seeking to lower its debt-to-earnings ratio in the medium term.

Write to Maria Armental at maria.armental@wsj.com

 

(END) Dow Jones Newswires

May 09, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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