QLT’s Atrigel licensed for addiction treatment

FORT COLLINS – The continued divesture of QLT USA’s assets has opened the door for a new pharmaceutical employer in Fort Collins.

QLT inked a deal with Reckitt Benckiser Pharmaceutical Inc. to exclusively license its Atrigel product, a sustained-release drug delivery technology that was formulated by QLT predecessor Atrix Laboratories Inc. As part of the licensing agreement, Reckitt Benckiser will take control of QLT USA’s headquarters in Fort Collins, at 2579 Midpoint Drive, along with 18 of the remaining QLT employees.

Reckitt Benckiser Pharmaceutical is a subsidiary of British product giant Reckitt Benckiser. The company’s offerings are dominated by household and personal care products, including Lysol, Resolve, Clearasil and French’s brand of mustards and sauces.

The pharmaceutical division, based in Richmond, Va., makes Suboxone and Subutex, both on the U.S. Food and Drug Administration’s Schedule III of controlled drugs. The buprenorphine-based medications are used for the treatment of dependence on opiates such as xycodone, hydrocodone, morphine, methadone and heroin. The company asserts that opiate dependence – an increasing issue in the United States – is a “chronic, relapsing brain disease.”

Reckitt will pay $25 million for the Atrigel license and could deliver potential milestone payments of up to $5 million based on the successful development of two Atrigel-formulated products.

“Our exclusive licensing of the Atrigel platform underscores our long-term commitment to expanding our pharmaceutical pipeline and building upon our addiction therapy franchise,´ said Shaun Thaxter, president of Reckitt Benckiser Pharmaceutical, in a prepared statement. “This agreement with QLT USA represents a strategic business opportunity that will contribute to the longevity and continued growth of our company going forward. In parallel with this announcement we continue our efforts to secure opportunities which will contribute to our near term and intermediate term strategic objectives that will make a difference in the lives of patients.”

Thaxter was traveling internationally and unavailable to comment further in time for the publication of this story.

Part of restructuring

The licensing agreement is part of an ongoing restructuring effort by QLT USA’s parent company, QLT Inc. QLT USA was formed through the $855 million purchase of Atrix in November 2004. The company’s products include Eligard, a prostate cancer treatment; Aczone, for the treatment of acne; and Atrigel.

The company announced a sweeping restructuring in January. The plan called for the sale of the QLT USA portfolio, a divesture of the company’s headquarters facility in Vancouver and a reduction of 115 employees – about 45 percent of its workforce at the time. In an August 2007 interview with the Business Report, a company official said that there were 35 to 40 employees in Fort Collins. Employment numbers have not been released since.

A series of misfortunes followed QLT after the acquisition of Atrix. The company has been in court a number of times to defend its patents – both those developed by the company and those acquired from Atrix. During 2007, the company was found liable to pay more than $180 million in damages relating to patent issues. Largely due to litigation charges, the company reported an operating loss of $154.6 million last year.

Litigation and earnings aside, QLT’s stock has taken a pummeling since the Atrix acquisition. The slide went from around $23 per share in early 2004 to $16 by the time the acquisition closed in November, until today, when the stock is trading below $4. At its highest – in 2000 – the stock was trading at more than $77.

The company is well on its way to completing its restructuring plan. QLT Inc. sold its Vancouver headquarters for about $62.6 million, and entered into a five-year lease agreement with the buyer for about 30 percent of the facility.

Divestiture proceeds

“We are extremely excited to announce this transaction for our third non-core asset, Atrigel. This licensing deal will bring our total proceeds from our announced non-core asset transactions to approximately $240 million,´ said Bob Butchofsky, president and CEO of QLT, in a statement announcing the deal. The company sold its Aczone product for $150 million in July. “We have worked diligently towards streamlining the company and believe we are close to reaching this goal. Eligard … is our remaining non-core asset which we hope to divest in the near future.”

“We will maintain a small staff of people at the facility in Fort Collins in addition to the 18 employees that will still be based in Fort Collins but be employed by Reckitt Benckiser,” he said.

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