Incyte Corporation has acquired Ariad Pharmaceuticals’ European operations for $140 million. The companies also agreed to enter into a license agreement that gives Incyte an exclusive license to develop and commercialize Iclusig (ponatinib) in Europe and other select countries.

The planned acquisition of a fully-integrated and established pan-European team of 125 employees, including medical, sales and marketing personnel, will further Incyte’s strategic plan and accelerate the establishment of its operations in Europe, helping to optimize clinical development and maximize the potential of future European launches for Incyte’s portfolio of products in development.

The agreement to divest its European operations and out-license Iclusig in Europe will enable Ariad to focus its promotion of Iclusig on the U.S. market, while strengthening its financial position and maintaining important optionality through a potential buy-back provision for the Iclusig license rights in the event of a change-in-control of Ariad, as described further below.

Incyte will receive an exclusive license to develop and commercialize Iclusig, the only approved BCR-ABL inhibitor with activity against the T315I mutation, throughout Europe and in other select countries. Iclusig is approved in Europe for the treatment of patients with chronic myeloid leukemia (CML) and Philadelphia-positive (Ph+) acute lymphoblastic leukemia (ALL) who are resistant to or intolerant of certain second generation BCR-ABL inhibitors and all patients who have the T315I mutation.

“The acquisition of Ariad’s European operations is a unique and strategic opportunity for Incyte, which will further establish our medical and commercial footprint in Europe,” said Hervé Hoppenot, chief executive officer, Incyte.

“The decision to divest our European operations and out-license the commercial rights to Iclusig in Europe is one of the key outcomes of our ongoing strategic review,” said Paris Panayiotopoulos, president and chief executive officer, Ariad. “We are delighted to have Incyte as a committed partner to continue Iclusig’s strong revenue growth in Europe, while significantly strengthening our financial position and maintaining future strategic optionality with a potential buy-back of Iclusig.”

In addition to the SPA, the parties have agreed to enter into a license agreement that gives Incyte an exclusive license to develop and commercialize Iclusig in the EU and 22 other countries, including Switzerland, Norway, Turkey, Israel and Russia. Ariad is entitled to receive tiered royalties of between 32 and 50 percent on net sales of Iclusig in the territory and up to $135 million in potential development and regulatory milestones for Iclusig in new oncology indications in the territory. Ariad may also become eligible to receive additional milestones for non-oncology indications, if approved, in the territory. Incyte has also agreed to fund a portion of the ongoing clinical development of Iclusig in Ariad’s OPTIC and OPTIC-2L clinical trials through cost-sharing payments of up to $7 million in each of 2016 and 2017.

The agreement also includes an option for an acquirer of Ariad to buy back the rights to Iclusig by repaying the upfront and milestone payments, plus paying an additional amount based on Iclusig sales during the previous 12 months and royalties of 20 to 25 percent on sales for the remaining royalty term. The buy-back provision cannot be exercised before two years or after six years from the closing of this transaction, and includes a transition period of up to one year.