Incyte Corp. and ARIAD Pharmaceuticals Inc. recently announced the entry into a definitive agreement for Incyte to acquire ARIAD’s European operations. At the close of the transaction, the companies will also enter into a license agreement whereby Incyte will obtain an exclusive license to develop and commercialize Iclusig (ponatinib) in Europe and other select countries.

Pursuant to the terms of a share purchase agreement, ARIAD will receive $140 million upfront payment, in addition to tiered royalties on European sales of Iclusig.

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 highly valuable 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.

The transaction is expected to close on or about June 1, subject to customary closing conditions, and is expected to reduce ARIAD’s 2017 annual operating expenses by approximately $65 million. The transaction is expected to be earnings accretive for Incyte in 2018.

Both Incyte and ARIAD expect to file additional disclosure documents with the Securities and Exchange Commission related to this transaction.