28th Feb 2008 12:00
AstraZeneca PLC28 February 2008 ASTRAZENECA PROVIDES AN UPDATE ON THE STATUS OF ITS ARRANGEMENTS WITH MERCK &CO., INC. AstraZeneca today announced that, under the provisions of the agreementsrelating to the restructuring of the AstraZeneca and Merck & Co. joint venturein the United States, AstraZeneca has been informed that Merck has elected notto exercise the First Option related to the relinquishment of Merck's rightsover the products not covered by the Partial Retirement (see paragraph below),other than NexiumTM and PrilosecTM. As a result of this decision, contingentpayments will continue on the products AtacandTM, LexxelTM, PlendilTM andEntocortTM until at least 2010, at which time AstraZeneca may exercise thisoption at the 2008 Appraised Value of approximately $650 million. The AppraisedValue also includes rights to certain products that are still in clinicaldevelopment (AZD6140, AZD3355, AZD0328 and AZD2327). AstraZeneca madecontingent payments in respect of the products included in the First Option of$69 million in 2007. Other aspects of the scheduled termination arrangements will proceed aspreviously disclosed: • The Partial Retirement of Merck's limited partnership interest, under which Merck's rights in respect of certain products will end. The products covered by the Partial Retirement include Toprol-XLTM, PulmicortTM, RhinocortTM and SymbicortTM. AstraZeneca made contingent payments in respect of these products amounting to $182 million in 2007. AstraZeneca will pay Merck approximately $4.27 billion in respect of the Partial Retirement. • A true-up of the Advance Payment, which was triggered at the time of the merger between Astra and Zeneca, under which Merck relinquished all rights, including contingent payment on future sales, to potential Astra products with no existing or pending US patents at the time of the merger, amounting to a payment by Merck to AstraZeneca of approximately $0.24 billion, inclusive of interest. • Settlement of the loan note receivable by AstraZeneca from Merck, in the amount of $1.4 billion inclusive of accrued interest. The combined effects of these three items will be a net cash outflow fromAstraZeneca to Merck of approximately $2.63 billion upon settlement during thefirst quarter 2008. Under the provision of the agreements a Second Option exists whereby AstraZenecahas the option to repurchase Merck's interests in PrilosecTM and NexiumTM in theUS. This option is exercisable by AstraZeneca in 2012 should AstraZenecaexercise the First Option in 2010. Exercise of the second option by AstraZenecaat a later date is also provided for in 2017 or if combined sales of the twoproducts fall below a minimum amount provided, in each case, that the FirstOption has been exercised. The exercise price for the Second Option is the netpresent value of the future annual contingent payments on PrilosecTM and NexiumTM as determined by the average valuation of two appraisers (one selected byeach party) at the time of exercise, which is subject to a potential true-upmechanism under certain conditions. AstraZeneca made contingent payments inrespect of US sales for PrilosecTM and NexiumTM amounting to $931 million in2007. Further details on the accounting treatment of these events from an AstraZenecaperspective will be provided in conjunction with the Q1 2008 earningsannouncement on 24 April, 2008. About AstraZeneca AstraZeneca is a major international healthcare business engaged in research,development, manufacturing and marketing of prescription pharmaceuticals andsupplier for healthcare services. AstraZeneca is one of the world's leadingpharmaceutical companies with healthcare sales of US $29.55 billion and is aleader in gastrointestinal, cardiovascular, neuroscience, respiratory, oncologyand infection product sales. AstraZeneca is listed in the Dow JonesSustainability Index (Global) as well as the FTSE4Good Index. 28th February 2008 For further information: Media Enquiries: Neil McCrae, +44 207 304 5045 (24 hours)Steve Brown, +44 207 304 5033 (24 hours)Chris Sampson, +44 207 304 5130 (24 hours) Investor Enquiries: Jonathan Hunt, +44 207 304 5087Ed Seage, +1 302 886 4065Karl Hard, +44 207 304 5322Jorgen Winroth, +1 212 579 0506Mina Blair, +44 20 7304 5084Peter Vozzo, (MedImmune) +1 301 398 4358 - Ends - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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