ViiV Healthcare, a global specialist HIV company based in the U.K., and Shionogi, a Japanese research-driven pharmaceutical company, have entered into an agreement substantially revising their integrase inhibitor relationship.

Under the revised agreement, ViiV Healthcare will acquire the exclusive global rights to the Shionogi-ViiV Healthcare joint venture assets. The assets include the investigational medicine dolutegravir and other early stage integrase inhibitor compounds.

In the new relationship, Shionogi will receive a royalty on net sales of the integrase inhibitor portfolio averaging in the high teens. For a defined period post-launch, as the franchise is becoming established, the royalty applies to sales above certain minimum thresholds; after that period, the royalty applies to all sales. Shionogi will also become a 10% shareholder in ViiV Healthcare and will be entitled to a proportional share of ordinary dividends paid. Shionogi will be entitled to representation on the ViiV Healthcare board, and will, for a defined period, continue to have ongoing involvement in the formulation of the development and commercialization plans for the integrase inhibitor portfolio.

The transaction is well aligned with both companies' mutual goal to advance the integrase inhibitor portfolio most effectively and efficiently, while maximizing the full potential long-term value of the assets. ViiV Healthcare will acquire exclusive development and commercialization rights to the integrase inhibitor portfolio. This will enable streamlining of R&D and commercial operations in order to maximize sales growth and shareholder returns. For Shionogi, the revised relationship offers the value of a royalty stream augmented by a shareholding in ViiV Healthcare itself, while releasing financial, operational and R&D resources to support its other pipeline products in global development.

ViiV Healthcare was established in 2009 as a specialty HIV company between GlaxoSmithKline and Pfizer, with an 85%, 15% equity split respectively. Post transaction, equity positions in ViiV Healthcare are GSK: 76.5%, Pfizer: 13.5% and Shionogi: 10%. Should dolutegravir be approved in the U.S. and E.U., GSK would be entitled to 1.8% additional equity. This will be an adjustment between GSK and Pfizer and will not dilute Shionogi. In addition GSK, Pfizer and Shionogi will continue to each be entitled to certain preferred ordinary dividends on the products they contributed to ViiV Healthcare (including the integrase inhibitors).

"The Shionogi-ViiV Healthcare joint venture has been extremely productive, with the first integrase inhibitor, dolutegravir, scheduled to commence filings before the end of the year,” said David Redfern, chairman of ViiV Healthcare. “Both ViiV Healthcare and Shionogi believe that now is the right time to simplify and evolve their existing arrangement. In doing so, we will deepen the relationship as shareholders and at board level. We will also unlock synergies through simplifying processes and avoiding duplication. We believe this new agreement will create long-term value for ViiV Healthcare and its shareholders."