ALK-Abelló

M&A Activity • Jul 26, 2016

Copenhagen, 2016-07-26 18:07 CEST (GLOBE NEWSWIRE) --

-- ALK (ALKB:DC / OMX: ALK B / AKABY / AKBLF): All rights to GRASTEK®,
RAGWITEK® and investigational house dust mite SLIT-tablets for USA, Canada
and Mexico to revert to ALK at no fee following a six- month transition
period
-- Ongoing registration processes for the investigational HDM SLIT-tablet will
continue
-- North America remains a major business opportunity and ALK will now
undertake a full strategic analysis before deciding on a revised strategy
-- Transaction has no impact on ALK’s full-year outlook for 2016

Following a recent review of its strategic priorities, MSD (known as Merck
(NYSE: MRK) in the United States and Canada) has informed ALK of its plans to
end their partnership agreement.

As a result, all rights to ALK’s sublingual allergy immunotherapy tablets
(SLIT-tablets) against grass, ragweed and house dust mite (HDM) allergies for
North America will revert to ALK from MSD at no fee to ALK.

North America still an important opportunity
Steen Riisgaard, Chairman of ALK’s Board of Directors and acting Chief
Executive, said: “The timing of this move is unexpected. However, we understand
that MSD’s decision was based on a prioritisation of resources. Our belief that
North America represents an important opportunity for ALK’s SLIT-tablets is
unchanged. The sales performance over the past two years has been below
expectations. Our view is that success there is likely to follow the path seen
in Europe, where slow early adoption has now given way to sustained growth.”

Sales of SLIT-tablets in Europe – from GRAZAX® sales and the launch of
ACARIZAX® in its first markets – grew by 97% to DKK 257 million in the first
half of 2016. In the same period, ALK’s income from SLIT-tablets in North
America amounted to DKK 49 million. Of this, DKK 34 million was a one-off
milestone payment, while the remainder came from sales royalties, R&D services
and product supply.

Steen Riisgaard continued: “Our experience in Europe suggests that there are
two factors critical to success with the SLIT-tablets: approval of the HDM
SLIT-tablet so the tablet range covers all three major respiratory allergies;
and approval for use in the treatment of allergic asthma. We will now consider
which new strategy for North America will best deliver long-term value creation
for ALK. Key to this will be ensuring that the right blend of marketing skills
and focus are applied to overcome the market barriers that currently exist.”

A six-month transition
Following a transition period that is expected to take six months, the rights
for all three products in North America will revert to ALK by early 2017. In
addition, as per the terms of the parties’ agreement, MSD will complete the
clinical study that is ongoing at their costs. The ongoing registration
processes for the investigational HDM SLIT-tablet will continue, with increased
involvement from ALK.

ALK remains fully committed to the North American markets and will mobilise
resources from its North American operations and headquarters in Denmark to
ensure a smooth transition in close collaboration with MSD. At the same time,
ALK will undertake a full strategic review of the North American markets to
determine the best options for the future commercialisation of the
SLIT-tablets. Options include alternative partnerships and commercialisation by
ALK’s North American subsidiary.

Successful registrations
The agreement between ALK and MSD, which covers the USA, Canada and Mexico, was
first signed in 2007 and has seen the successful registration of GRASTEK® and
RAGWITEK® for grass and ragweed allergic rhinitis, respectively, as well as the
submission of a U.S. FDA Biologics License Application for the HDM SLIT-tablet,
known as ACARIZAX® in Europe.

Registration status of ALK’s SLIT-tablets in North America

             United States                      Canada

---

GRASTEK® Launched Launched

RAGWITEK® Launched Launched

HDM SLIT-tablet Submitted (Feb 2016 U.S. FDA BLA) Submitted (May 2016)
Possible approval in 2017 Possible approval in 2017

---

ALK’s full-year outlook unaffected
The rights transaction does not impact ALK’s full-year expectations.

ALK will publish its six-month interim report (Q2) on 16 August.

                             ALK-Abelló A/S

For further information please contact:
Investor Relations: Per Plotnikof, tel. +45 4574 7527, mobile +45 2261 2525
Media: Jeppe Ilkjær, tel. +45 7877 4532, mobile +45 3050 2014

About the partnership with MSD
In 2007, ALK entered into a strategic partnership with MSD (then Schering
Plough), known as Merck (NYSE: MRK) in the USA and Canada, to develop and
commercialise a portfolio of sublingual allergy immunotherapy tablets against
grass pollen (GRASTEK®), ragweed (RAGWITEK®) and house dust mite allergy in the
USA, Canada and Mexico. Under the agreement, ALK has received approximately DKK
700 million in upfront, milestone payments and other payments. ALK was entitled
to royalties on net sales as well as payments for product supply and R&D
support. MSD has been responsible for all costs of clinical development and
commercialisation while ALK has been responsible for production and supply of
drug substance.

About ALK
ALK is a research-driven global pharmaceutical company focusing on allergy
prevention, diagnosis and treatment. ALK is a world leader in allergy
immunotherapy – a treatment of the underlying cause of allergy. The company has
approximately 2,000 employees with subsidiaries, production facilities and
distributors worldwide. In addition to the partnership with MSD, ALK has
entered into partnership agreements with Torii, Abbott and Seqirus to
commercialise sublingual allergy immunotherapy tablets in Japan, Russia and
South-East Asia, and Australia and New Zealand, respectively. The company is
headquartered in Hørsholm, Denmark, and listed on NASDAQ Copenhagen. Find more
information at www.alk.net.

In North America, ALK’s subsidiary manufactures and sells bulk allergen
extracts and allergy diagnostic kits to allergy specialists across the USA and
Canada. In 2015, ALK, Inc. generated sales of approximately DKK 400 million
(+12%), and recently recorded its ninth consecutive quarter of double-digit
growth. ALK, Inc. employs close to 200 people in the USA and Canada.