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STADA reorganizes Biosimilar project Epo-zeta distribution rights to Hospira

21 Nov 2006

STADA has today completed a comprehensive reorganization of the Group’s ongoing biosimilar projects.

BAD VILBEL, Germany | Nov 20, 2006 | STADA has today, on November 20, 2006, completed a comprehensive reorganization of

the Group’s ongoing biosimilar projects. The goal of this reorganization is to secure the long-term earnings potential and, at the same time, a curbing of the risks of the Group’s financial commitment associated with these projects. Opportunities and risks in STADA's biosimilar projects should thereby, from the perspective of the Executive Board, be appropriately balanced.

As is known, STADA is currently pursuing, through BIOCEUTICALS Arzneimittel AG, Bad Vilbel, which is predominantly financed via venture capital, various biosimilar projects which are in differing development stages. While a relevant approval for the project Erythropoietin-zeta (Epo-zeta), which is currently in the EU approval process, is still possible in late 2007, pre-clinical studies are just now running for the filgrastim project. The third project, interferon-beta, will not, as a result of the reorganization, be pursued further since, from today's perspective, the development risks and marketing opportunities do not justify the high expenditures for the completion of the project.

In the course of the reorganization, comprehensive contractual agreements with regard to the development, manufacturing and distribution rights for Epo-zeta have been completed today. In accordance with these agreements, BIOCEUTICALS gets back the worldwide exclusive distribution rights for Epo-zeta from the previous rights holder, the STADA subsidiary cell pharm GmbH, Hanover, and simultaneously transfers the exclusive rights for the countries of the EU (with the exception of Germany), several additional European countries as well as the USA and Canada to Hospira Inc., located in Lake Forest, Illinois, USA and a wholly-owned Hospira subsidiary (“Hospira”). Furthermore, Hospira receives a right of first refusal for the distribution rights of Epo-zeta in all other countries of the world. In Germany following an approval, Epo-zeta will be distributed semi-exclusively by Hospira and cell pharm, whereby cell pharm has now received significantly improved conditions from the licensor, BIOCEUTICALS. Lastly, Hospira has development and manufacturing rights for the US and Canada.

For the allocated distribution rights, BIOCEUTICALS receives from Hospira a current payment in the total amount of EUR 16.4 million as well as further payments, each depending on the indication-related progress of the project in the individual contract area in the total amount of up to EUR 26.5 million. These agreed payments clearly improve the financial basis of BIOCEUTICALS and provide STADA relieve in the credit financing of the further current business operations of BIOCEUTICALS up to the achievement of its own earnings following the initial market launch of a product developed by BIOCEUTICALS. Following the market launch in the individual national markets, Hospira will pay BIOCEUTICALS sales-related royalty payments, which partially depend on the volumes procured and the market prices achieved in the individual contract areas, and will procure the product for the EU from BIOCEUTICALS at contractually agreed prices.

Since Hospira is an internationally established specialty supplier of hospital and clinic products with sales structures established for that purpose and because the sales focus of Epo-zeta will be in the hospital and clinic area, the license issue to Hospira significantly improves the marketing opportunities for Epo-zeta in the EU as well as in the USA and Canada. Thus, following the market launch of Epo-zeta, in contrast to a launch by STADA, now significantly higher sales for this product and thereby also higher profits for the licensor and product supplier BIOCEUTICALS can be expected. BIOCEUTICALS will therefore presumably be able to return the loans and bank guarantees provided by STADA more quickly; furthermore, STADA participates in the dividends paid by BIOCEUTICALS in the amount of the shares held of 14.99%. STADA also has no need to develop a sales network specialized in Epo-zeta in the EU and with the high cost burden associated with it.

In addition, STADA continues to hold a call option which can be exercised yearly from 2011, according to which the company can acquire all shares in BIOCEUTICALS at a price which is already defined via a formula. The Group’s long-term opportunities associated with this in the area of biosimilars are thereby not affected by the current reorganization.

SOURCE: STADA Arzneimittel AG

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