Elanco sells rights for Lotilaner in human health to Blackstone.

Elanco Animal Health Incorporated recently made a significant announcement regarding the sale of future tiered royalties and commercial milestones associated with XDEMVY® (lotilaner ophthalmic solution) 0.25% for human health application to funds linked to Blackstone Life Sciences. This transaction, which involved $295 million in cash, was a strategic move to expedite debt reduction efforts and align Elanco with an expected net leverage ratio of 3.9x to 4.3x adjusted EBITDA by the end of 2025. By selling these non-core assets, Elanco aimed to reduce interest expenses by approximately $10 million and utilized incremental cash flow to advance debt repayment goals while positioning their company for financial success in the future. In 2019, Elanco licensed lotilaner exclusively to Tarsus Pharmaceuticals, Inc. for innovative exploration into various unmet human health needs. The successful approval of XDEMVY in 2023 as the first lotilaner-based product for human use marked a significant milestone in addressing Demodex blepharitis (DB), a prevalent eyelid disease caused by Demodex mites. Elanco’s President and CEO, Jeff Simmons, emphasized the company’s commitment to pioneering scientific advancements that transcend their portfolio to create substantial value across different industries. Simmons highlighted the importance of focusing on recent innovations and driving core business sales growth in the current year while acknowledging Blackstone’s collaborative investment and support. The strategic partnership between Elanco, Tarsus Pharmaceuticals, and Blackstone Life Sciences underscores the successful execution of Elanco’s innovation in developing XDEMVY. Blackstone Life Sciences’ Senior Managing Directors, Craig Shepherd and Kiran Reddy, commended Elanco’s scientific expertise that led to XDEMVY’s efficacy and safety profile while recognizing Tarsus Pharmaceuticals’ exceptional operational capabilities that contributed to the commercial success of this groundbreaking treatment. The agreement with Blackstone Life Sciences pertains to specific tiered royalties linked to U.S. net sales of XDEMVY from April 2025 to August 2033 and certain commercial milestones. Elanco will retain all royalty payments associated with net sales outside the U.S. and any future applications of lotilaner in human health beyond ophthalmic solutions. The involvement of Morgan Stanley & Co. LLC as the sole structuring agent in this agreement further solidifies the strategic and well-executed nature of this transaction. It is important to note that Elanco issued a cautionary statement regarding forward-looking statements to address potential uncertainties and risks associated with such deals. They emphasized the importance of considering various factors that could impact actual results compared to projections. Elanco continues to prioritize animal health innovation and create value for farmers, pet owners, veterinarians, stakeholders, and society at large on a global scale. Their commitment to advancing animal health while maintaining a sustainable and impactful footprint resonates with their vision of enriching lives through food and companionship and promoting a healthier future for animals, people, and the planet. Through strategic partnerships and innovative developments, Elanco remains at the forefront of driving impactful changes across the agriculture and veterinary sectors.