I’m extremely pleased to share that our highly competitive, six-month partnering process has concluded with likely the largest ex-U.S. partnership in biotech history. We chose Servier as our ex-U.S. partner for ITCA 650 because they are an extraordinarily well-suited strategic match for us outside the U.S. We have been interacting with Servier for more than a year and they are a world-class, privately held pharmaceutical company headquartered in Paris, France, that shares our vision and approach to disruptive innovation. They have a strong presence in 140 countries outside the U.S., with more than 21,000 employees and an annual turnover in sales that exceeds €4.2 billion. They have been competing in the field of diabetes for 30 years and they know the most important customers to make ITCA 650 a success. This strength, expertise and long-standing presence with customers will open up vital reach to patients, providers and payors around the world for our potentially game-changing late-stage candidate in type 2 diabetes.
Through our partnership, which grants Servier the licensing right to ITCA 650 in all countries outside the United States and Japan, we have secured dedicated efforts outside the U.S. and the fuel necessary for our Company to stay true to our path and our vision – to remain an independent, disruptively innovative biotechnology company with huge growth potential ahead for all our stakeholders, including the patients, payors and providers we aim to serve.
Many biotech companies never make it this far, and many are left to choose from a poor or limited selection of potential partners. We had the rare fortune of being able to choose from among the best of the best! And our position and strategy was so strong that we had several of the largest pharmaceutical companies in the diabetes category competing to be our partner of choice. The span and strength of the choices we had in our hands, we believe, speaks to the opportunity we have at hand.
Ultimately, we chose not to pursue the traditional Big Pharma options proposed to us. We decided to stay true to our vision, our core values, and our culture, which we firmly believe is key to our success in shaping a totally new way to deliver medicines and change lives. In our opinion, truly disruptive technologies and products tend to come from smaller, faster, more flexible, and more innovative companies not tied to the traditional business models of the past and present – as so many of the largest pharmaceutical firms in our well established industry are. Servier is different and they showed it repeatedly in their actions and their partnering mindset. Servier brings a unique combination of financial strength, entrepreneurial spirit, deep diabetes expertise without any competitive conflicts, and a track record of innovation and excellent performance in the EU and emerging markets. Intarcia intends to remain entrepreneurial in our actions – not just our words – and we believe this path forward with Servier is yet another example of staying the course even when there is “no analogue” for what we are doing.
Our new partnership also gives us the ability to grow in critical areas important at this point in our life cycle and we now intend to add much-needed staff. With upfront and potential milestone payments of just over $1 billion, as well as tiered net sales-related payments, Intarcia can and will rally around the full opportunities of ITCA 650. We will also begin important work on our pipeline and further leveraging our novel delivery technologies. Although much hard work lies ahead, our horizons of opportunity just became amazingly broader and wonderfully closer.
And as large and significant as the terms of this new deal are, they only begin to outline the disruptive potential of ITCA 650 in one of the world’s largest pharmaceutical markets – type 2 diabetes. This category is estimated to exceed $65 billion globally by the mid 2020s. But what is really gratifying to us is the value of the potential clinical benefits we can bring to patients, providers and payors around the world. The best progress is progress that extends significant benefits laterally across the broadest audience of stakeholders possible.
Specific terms of the partnership call for approximately $171 million in upfront monies paid to Intarcia, followed by $230 million for two near-term regulatory milestone payments, and then an additional $650 million for development regulatory and sales milestones. With commercial success, we will also receive tiered net sales-related payments ranging from the low teens to the mid-30s via a markup on sale of product supplied through the manufacturing and supply agreement. Both parties will co-invest in a new manufacturing site for redundancy purposes to be located in Ireland. Intarcia will book U.S. sales and manufacture and supply all product globally.
Of critical importance, our new partnership enables us to keep our independence and our strategic freedom to operate as we advance our game changing therapies – including in the U.S. where we’ve managed to keep 100% of the commercial rights to ITCA 650. Had we not been so fortunate, we might have signed a deal that could have very well slowed us down, diminished our vision, and left us trying to work with partners that had varying degrees of competitive conflicts.
With our continuing success, I’m humbled, and at the same time I grow increasingly proud and fortunate to lead our great team of talent at Intarcia. In the last few years, we have accomplished amazing things while staying much leaner than most biotech companies at a similar point of late-stage drug development. I think this discipline has been advantageous to us in many ways – including our culture. We shun bureaucracy and the lethargy that comes with diminished accountability. Instead we crave the opportunity to make a real difference frequently in our work and in our Company. That’s who we are and the type of Company we intend to stay.
Put simply, our vision is secure and we have never been in a stronger position to advance and make that vision a reality. We can and will continue to build a disruptively innovative biotechnology company that makes significant differences and breakthrough medicines for patients around the world. Nothing about that vision has changed since I joined Intarcia, and our current partnership does not alter it – it unleashes it and puts it all in our hands. We remain on course due to our collective efforts, and with this partnership, our pace forward is accelerated and our horizons are broader.
I’d like to thank each of you and I’d also like to recognize the steadfast support of our wonderful investors who share our vision for innovation, changing lives, and long-term growth. You have our continued commitment to excellence and unrequited thirst for winning and changing and improving lives as we go forward. And a special ‘shout-out’ and welcome to our new Servier partners!
Chairman, President and CEO
Intarcia Therapeutics, Inc.