Download QUEST DIAGNOSTICS INC (Form: 8-K, Received: 07/18/2013 06:39

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) : July 12, 2013
Quest Diagnostics Incorporated
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or other jurisdiction of Incorporation)
001-12215
16-1387862
(Commission File Number)
(I.R.S. Employer Identification No.)
Three Giralda Farms
Madison, NJ 07940
07940
(Address of principal executive offices)
(Zip Code)
(973) 520-2700
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions ( see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
[ ] 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the exchange Act (17 CFR
[ ] 240.13e-4(c))
Item 8.01
Other Events
On July 18, 2013, Quest Diagnostics Incorporated (the "Company") announced that it completed the sale of its rights to
royalties from commercialization of the drug candidate ibrutinib to Royalty Pharma, an investor in pharmaceutical royalty
interests, for $485 million in cash.
The sale is expected to result in after tax cash proceeds of approximately $300 million, before associated transaction costs.
The gain associated with the sale will be recorded in the third quarter and will be excluded from adjusted earnings. The Company
expects to use the proceeds to drive shareholder value, consistent with its capital deployment strategy.
As part of its acquisition of Celera in 2011, the Company gained rights to royalties on ibrutinib, an experimental cancer
therapy currently in Phase III development by Pharmacyclics and Johnson & Johnson, through its Janssen Biotech subsidiary.
Ibrutinib is an inhibitor of the enzyme Bruton's tyrosine kinase (BTK).
The Company continues to retain royalty rights to other clinical indications that result from Celera's drug assets, including
programs that target histone deactylase, or HDAC, selective HDAC enzymes and Factor VIIa, as well as other BTK compounds.
In addition, the Company continues to hold the cathepsin K intellectual property licensed by Celera to Merck for the drug
odanacatib. All of these agreements pertain to drugs that have not yet been commercialized. The Company has not yet received
any royalty payments related to these programs.
Since the Company announced its intention to refocus on the core business last November, it initiated a disciplined
portfolio review that, to date, has resulted in the disposition of two businesses, including OralDNA, a dental diagnostics company,
and HemoCue, a point of care testing company, as well as the ibrutinib royalty rights.
A copy of the press release announcing the sale is filed as Exhibit 99.1 to this Current Report on Form 8-K and is
incorporated by reference herein.
Item 9.01
Financial Statements and Exhibits
d.
Exhibit
99.1
Description
Press Release
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, hereunto duly authorized.
July 18, 2013
QUEST DIAGNOSTICS INCORPORATED
By:
/s/ William J. O'Shaughnessy, Jr.
William J. O'Shaughnessy, Jr.
Assistant General Counsel and Secretary
Exhibit 99.1
QUEST DIAGNOSTICS SELLS IBRUTINIB ROYALTY RIGHTS
TO ROYALTY PHARMA FOR $485 MILLION IN CASH
-- Retains royalty rights to odanacatib and other Celera drug assets -MADISON, N.J. and NEW YORK, July 18, 2013 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world's leading
provider of diagnostic information services, announced today that it has completed the sale of its rights to royalties from
commercialization of the drug candidate ibrutinib to Royalty Pharma, the industry leader in acquiring royalty interests in marketed and
late stage biopharmaceutical products, for $485 million in cash.
"This transaction is consistent with our strategy to refocus on our core diagnostic information services business," said Steve
Rusckowski, Quest Diagnostics President and CEO. "The ibrutinib royalty rights were not core to our business. After considering
interest in ibrutinib, we conducted a robust market process, and believe that selling now is in the best interests of our shareholders. We
expect to use the proceeds to drive shareholder value, consistent with our capital deployment strategy."
The sale is expected to result in after tax cash proceeds of approximately $300 million, before associated transaction costs. The gain
associated with the sale will be recorded in the third quarter and will be excluded from adjusted earnings.
As part of its acquisition of Celera in 2011, Quest Diagnostics gained rights to royalties on ibrutinib, an experimental cancer therapy
currently in Phase III development by Pharmacyclics (NASDAQ: PCYC) and Johnson & Johnson (NYSE: JNJ), through its Janssen
Biotech subsidiary. Ibrutinib is an inhibitor of the enzyme Bruton's tyrosine kinase (BTK).
"We are pleased to have had an opportunity to work with Quest in this win-win transaction, in which Quest was able to dispose of a
non-core asset as part of its strategic plan and we were able to acquire an interest in ibrutinib, an exciting potential therapy addressing
the needs of patients with chronic lymphocytic leukemia, small lymphocytic lymphoma and mantle cell lymphoma," said Pablo
Legorreta, Founder & CEO of Royalty Pharma.
Quest Diagnostics continues to retain royalty rights to other clinical indications that result from Celera's drug assets, including programs
that target histone deactylase, or HDAC, selective HDAC enzymes and Factor VIIa, as well as other BTK compounds. In addition,
Quest continues to hold the cathepsin K intellectual property licensed by Celera to Merck for the drug odanacatib. All of these
agreements pertain to drugs that have not yet been commercialized. Quest Diagnostics has not yet received any royalty payments related
to these programs.
Since the company announced its intention to refocus on the core business last November, it initiated a disciplined portfolio review that,
to date, has resulted in the disposition of two businesses, including OralDNA, a dental diagnostics company, and HemoCue, a point of
care testing company, as well as the ibrutinib royalty rights.
About Royalty Pharma
Royalty Pharma is the industry leader in acquiring royalty interests in marketed and late stage biopharmaceutical products. With over
$10 billion in assets, Royalty Pharma owns royalty interests in 41 marketed and late stage biopharmaceutical products, including
Abbott's Humira ®, Johnson and Johnson's Remicade ® and Prezista ®, Gilead's Atripla ®, Truvada ®, Complera ® and Emtriva ®,
Pfizer's Lyrica ®, Amgen's Neupogen ® and Neulasta ®, Genentech's Rituxan ®, Astella's Lexiscan ®, Merck's Januvia / Janumet ®,
Roche's Mircera ®, UCB's Cimzia ® and Biogen Idec's Tecifidera ®. Additional company information is available at
royaltypharma.com.
About Quest Diagnostics
Quest Diagnostics is the world's leading provider of diagnostic information services that patients and doctors need to make better
healthcare decisions. The company offers the broadest access to diagnostic testing services through its network of laboratories and
patient service centers, and provides interpretive consultation through its extensive medical and scientific staff. Quest Diagnostics is a
pioneer in developing innovative diagnostic tests and advanced healthcare information technology solutions that help improve patient
care. Additional company information is available at QuestDiagnostics.com.
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