Summary
Boston Scientific Corporation (BSX) announced on November 26, 2019, that one of its wholly-owned subsidiaries has entered into a royalty purchase agreement with OMERS. Under this agreement, the subsidiary sold 50% of its Zytiga® royalty rights to OMERS for $256 million in cash. These royalty interests were acquired as part of Boston Scientific's earlier acquisition of BTG plc. This transaction effectively results in no future cash benefit to Boston Scientific from Zytiga® royalties, as they had previously agreed to pay 50% of this stream to a third party. The company expects no impact on its income statement for 2019 and beyond, and the proceeds will be used primarily for debt reduction. Crucially, this divestiture does not alter Boston Scientific's previously issued financial guidance for 2019, as the royalty business was classified as a passive asset.
Key Highlights
- 1BSX sold 50% of its Zytiga® royalty stream for $256 million cash to OMERS.
- 2The royalty rights were acquired through the recent acquisition of BTG plc.
- 3The transaction eliminates any future cash benefit from Zytiga® royalties for BSX, as 50% was already designated for a third party.
- 4Proceeds from the sale will be used primarily to pay down debt.
- 5The sale is expected to have no impact on BSX's income statement for 2019 and subsequent periods.
- 6BSX's financial guidance for 2019 remains unchanged by this transaction.
- 7The Zytiga® royalty business was considered a passive asset on BSX's balance sheet.