This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Deal: Royalty Pharma Buys Quest Drug Rights For $485M

NEW YORK (The Deal) -- Lab test provider Quest Diagnostics Inc. (DGX) has made another deal in its ongoing effort to sell off assets that don't fit its new core business strategy, this time selling royalty rights for the drug ibrutinib to RP Management LLC, which is known as Royalty Pharma.

Quest said Thursday that Royalty is paying $485 million cash for the payment stream from ibrutinib, a cancer drug being developed by Pharmacyclics Inc. (PCYC) and Johnson & Johnson's (JNJ) biologics unit Janssen. Madison, N.J.-based Quest obtained the royalties for the drug in its purchase of gene-based diagnostics company Celera Corp.

Quest bought Celera for $657 million in 2011 to further its growth strategy at the time to become a leader in esoteric and gene-based testing for cancer, cardiovascular disease, infectious disease and neurological disorders. At the time of the sale, Celera CEO Kathy Ordonez said her company's "discovery and validation of new biomarkers exceeded our capacity to commercialize them."

Then Quest was hit hard in the interim by lower healthcare utilization and reductions in reimbursement. In May 2012, Quest named a new CEO, Stephen Rusckowski. While contemplating its strategy turnaround, the company also felt the sting of Hurricane Sandy, which cut fourth-quarter 2012 revenue by $21 million.

In November, Rusckowski said he was refocusing the company's business on diagnostic information systems to drive shareholder value and restore growth. Quest has been adhering to that strategy and selling off assets that don't dovetail with it. It also has a new senior management team in place.

Quest sold HemoCue AB in February for about $300 million, six years after acquiring it to help the company expand globally. HemoCue, which provides hemoglobin, glucose and other testing systems worldwide, brought roughly $120 million less than what Quest paid for it in 2007. Quest sold it to Danaher Corp. unit Radio-meter Medical ApS.

In a Thursday conference call with investors, Rusckowski said, "We saw continued revenue softness in the second quarter compared to the prior year." This year, he said "is a building year; we are making good progress executing our five-point strategy and we expect stronger performance in the second half."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,102.04 +50.31 0.30%
S&P 500 1,973.63 -4.59 -0.23%
NASDAQ 4,424.7040 -7.4420 -0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs