Abbott Laboratories (ABT) recently signed a deal to expand its pharma portfolio. The company entered into a collaboration agreement with biotech company Galapagos for the development and commercialization of an oral, next-generation JAK1 inhibitor.
GLPG0634 is currently in phase II development for the treatment of rheumatoid arthritis (RA) and other autoimmune diseases.
Results from a 4-week phase IIa study showed that GLPG0634’s efficacy was among the best seen in RA. Galapagos reported that all patients completed the study with very few of them experiencing any side effects. The company said that no anemia, change in blood pressure or lipids were observed.
GLPG0634 is scheduled to move into a phase IIa dose-range finding study shortly. Galapagos expects to report top-line results from this study before the end of 2012. The full phase II package will be delivered to Abbott Labs in 2014.
This deal makes sense for Abbott Labs which already has a strong presence in the market for autoimmune diseases thanks to its blockbuster drug, Humira. Moreover, Abbott Labs needs to build its pharma pipeline.
Terms of the Agreement
Per the terms of the agreement, Abbott Labs is required to make an upfront payment of $150 million to Galapagos. Once the phase II RA studies are done, Abbott Labs will pay a one-time license fee of $200 million, provided the studies meet certain pre-determined criteria.
Once the phase II package is handed over, Abbott Labs will be responsible for the phase III development and manufacturing of the candidate. Abbott Labs could end up paying up to $1 billion on the achievement of developmental, regulatory, commercial and sales-based milestones.
Galapagos will also receive tiered double-digit royalties on net sales once the product is commercialized. Galapagos has co-promotion rights in Belgium, the Netherlands and Luxembourg.
Neutral on Abbott Labs
We currently have a Neutral recommendation on Abbott Labs, which carries a Zacks #3 Rank (short-term Hold rating). Abbott Labs remains on track to split into two separate publicly traded companies by the end of 2012.
While one company will deal in diversified medical products, the other will focus on research-based pharmaceuticals. We are positive on the split, which should allow the two separate entities to perform in a more focused manner.
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