Novartis buys remaining rights to ofatumumab from GlaxoSmithKline for over $1 billion

Novartis entered into an agreement to acquire all remaining rights to ofatumumab from GlaxoSmithKline under a deal potentially worth more than $1 billion, the companies announced Friday. The Swiss drugmaker gained rights to the anti-CD20 monoclonal antibody for oncology indications, where it is marketed under the brand name Arzerra, as part of a series of asset-swap transactions completed earlier this year.

As part of the latest agreement, Novartis will make an upfront payment of $300 million to GlaxoSmithKline, with a further payment of $200 million due following the start of a Phase III study in multiple sclerosis. In addition, the companies noted that upon completion of pre-determined milestones, contingent payments of up to $534 million may be made, with Novartis also paying GlaxoSmithKline royalties of up to 12 percent on any future net sales of ofatumumab in autoimmune conditions.

Novartis will be responsible for the global development, regulatory and commercialisation activities for ofatumumab, with the drug currently being studied for relapsing remitting MS and other autoimmune indications. According to the Swiss drugmaker, Phase IIa trial results for subcutaneous ofatumumab demonstrated significant reduction of up to 90 percent in the cumulative number of new brain lesions in patients with MS between weeks four and 12. The company added that ofatumumab is ready to begin pivotal Phase III studies.

"Novartis is pleased to further reinforce our commitment to neuroscience and to add an exciting new treatment to our strong MS portfolio," said David Epstein, head of Novartis Pharmaceuticals. The drugmaker currently markets the MS therapies Gilenya (fingolimod) and Extavia (interferon beta-1b), along with a generic version of Teva's Copaxone (glatiramer acetate) in the US under the name Glatopa. Novartis is also developing the investigational MS treatments BAF312, which is in late-stage studies, and CJM112.

Gilenya, which generated sales of $2.5 billion last year, will start to lose patent protection in 2019, with Barclays analyst Michael Leuchten noting that Novartis needs a successor to "soften the blow." However, Leuchten indicated that the drug will be significantly behind Roche’s similar experimental therapy ocrelizumab, which could be launched in 2017. "It fits strategically, but from a timing perspective there’s going to be quite a gap," Leuchten remarked. Kepler Cheuvreux analyst Fabian Wenner added "patients either want better convenience than the old drugs or they want better efficacy, and ofatumumab is offering neither of those things. The chances of this being successful in MS and generating any sales are zero in my view."

For related analysis, read ViewPoints: Novartis eyes multiple sclerosis expansion, but Roche's ocrelizumab could change the game.

Meanwhile, David Redfern, chief strategy officer at GlaxoSmithKline, indicated that the divestiture of ofatumumab rights provides "significant additional value for...shareholders" as the company "continue[s] to focus on progressing our pipeline in core therapy areas including HIV, oncology, vaccines, cardiovascular, immuno-inflammation and respiratory diseases."

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