Biogen-Eisai Ink Alzheimer's Deal
Biogen Idec Inc. (BIIB) and Eisai Co., Ltd. (ESALY) announced a development and commercialization agreement for a couple of Alzheimer’s disease (:AD) candidates in Eisai’s pipeline.
Candidates Covered Under the Deal
The agreement involves two of Eisai's AD candidates, E2609 and BAN2401. While BAN2401 (an anti-amyloid beta/Aβ antibody) is already being evaluated in phase II studies, preparations are ongoing to initiate a phase II study on E2609 (a β-site amyloid precursor protein cleaving enzyme/BACE inhibitor).
According to the terms of the deal, Eisai enjoys an option to collaborate with Biogen for the latter’s AD candidates – BIIB037 (an anti-Aβ antibody, phase Ib) and an anti-tau monoclonal antibody. However, the companies plan to focus on the development and commercialization of Eisai’s candidates initially.
Terms of the Deal
As per the terms of the deal, Biogen will make an upfront payment to Eisai, apart from development, regulatory and sales related milestone payments. Both companies will share costs and profits equally. However, Eisai, which will lead the development and regulatory path, will book all sales for E2609 and BAN2401.
Both companies will co-promote the drugs in major markets like the U.S. and the EU. The agreement provides Eisai with the option to receive an additional one-time payment related to co-development and co-commercialization in Japan.
Our Take
We are pleased with Biogen’s effort to boost its neurodegenerative disease pipeline. The Alzheimer’s disease market represents huge commercial potential and a successfully developed product could generate billions of dollars in sales. As per data provided by the Alzheimer's Association, approximately 5.2 million people suffer from AD in the U.S. alone in 2013.
However, we note that the successful development of therapies for the treatment of Alzheimer’s disease is challenging and several companies including Eli Lilly and Company (LLY) have failed in developing treatments for the same.
Biogen carries a Zacks Rank #2 (Buy). Other well-ranked stocks in the biotech sector include Gilead Sciences (GILD) carrying a Zacks Rank #1 (Strong Buy).
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