BTG's Operational Reshuffle Continues With Divestiture Of Brachytherapy Business
Espicom View: This is the latest in a series of recent strategic movements by BTG, which include the July 2013 acquisitions of Ekos and the Targeted Therapies division of Nordion. The Brachytherapy business provided minimal return for BTG; expunging of the business will allow the company to focus on continued development of its newly-acquired TheraSphere (yttrium-90) liver cancer therapy. The product produces high gross margins of over 70%, meaning that unlike the Brachytherapy business, TheraSphere will contribute significantly to BTG's financial position.
London, UK-based BTG has sold its Brachytherapy business to Eckert & Ziegler, headquartered in Berlin, Germany. Under the terms of the agreement, all of BTG's Brachytherapy assets, including the products, associated intellectual property and facility in Oxford, CT, will be transferred to Eckert & Ziegler on completion, which is anticipated by mid-October. BTG will receive US$5mn on closing, together with a 30% share of revenues from the products that are transferring for a period of 12 months, commencing either with the start of production by Eckert & Ziegler or on January 2014, whichever is the earliest.
BTG acquired the Brachytherapy business in January 2011, when it purchased Biocompatibles International. In the fiscal year ended March 31 2013, the Brachytherapy business generated GBP 7.3mn of BTG's GBP 233.7mn of revenue and contributed less than GBP 1mn of the company's underlying operating profit of GBP 69mn.
In May, Biocompatibles voluntarily stopped the manufacture and distribution of brachytherapy products following receipt of a warning letter from the FDA, citing concerns relating to process validations, data analysis, complaint investigations and environmental controls at the facility. Significant progress has been made in identifying and implementing remedial actions to address the issues cited. Eckert & Ziegler will be responsible for completing this work and recommencing manufacture and sale of the products.