Elanco Animal Health Sells Xdemvy Royalties To Blackstone in $295 Million Deal

Elanco Animal Health Incorporated (NYSE:ELAN) on Monday announced the sale of certain future tiered royalties and commercial milestones associated with Xdemvy (lotilaner ophthalmic solution) 0.25% for the human health application of lotilaner to Blackstone Life Sciences and Blackstone Credit & Insurance for $295 million in cash.

The company will use the proceeds to accelerate debt reduction, positioning Elanco to achieve an expected net leverage ratio of 3.9x to 4.3x adjusted EBITDA by the end of 2025.

Also Read: Elanco Animal's Outlook Lags Street Expectations, But Analyst Sees Time For Elanco's Commercial Investment To Payoff

Elanco will repay portions of its outstanding term loans on a pro-rata basis, which is expected to reduce interest expense by approximately $10 million, offset by the sale of approximately $10 million of royalties based on Elanco's initial 2025 guidance.

In 2019, Elanco exclusively licensed lotilaner to Tarsus Pharmaceuticals, Inc. (NASDAQ:TARS) for exploration as a solution to several unmet human health needs.

In 2023, Xdemvy became the first lotilaner-based product approved for human use and the only FDA-approved medicine for Demodex blepharitis, a common eyelid disease in humans caused by Demodex mites.

The agreement applies to certain tiered royalties associated with Xdemvy's U.S. net sales from April 2025 through August 2033 and certain commercial milestones.

Elanco retains the rights to all royalty payments on net sales outside the U.S. and any future human applications of lotilaner beyond ophthalmic solutions.  

Elanco Animal Health is scheduled to release its first quarter 2025 financial results on Wednesday, May 7.

Analysts expect adjusted earnings per share of 31 cents and sales of $1.21 billion, as per data from Benzinga Pro.

Elanco Health Stock Prediction For 2025

Equity research analysts on and off Wall Street typically use earnings growth and fundamental research as a form of valuation and forecasting. But many in trading turn to technical analysis as a way to form predictive models for share price trajectory.

Some investors look to trends to help forecast where they believe a stock could trade at a certain point in the future. Looking at Elanco Animal Health, an investor could make an assessment about a stock's long term prospects using a moving average and trend line. If they believe a stock will remain above the moving average, which many believe is a bullish signal, they can extrapolate that trend into the future using a trend line. For Elanco Animal Health, the 200-day moving average sits at $12.34, according to Benzinga Pro, which is above the current price of $9.75. For more on charts and trend lines, see a description here.

Traders believe that when a stock is above its moving average, it is a generally bullish signal, and when it crosses below, it is a more negative signal. Investors could use trend lines to make an educated guess about where a stock could trade at a later date if conditions remain stable.

Price Action: ELAN stock closer lower by 1.03% to $9.65 and TARS stock lower by 1.35% to $48.00 on Monday.

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