While the timing of the purchase is ideal in many respects for Novartis considering its portfolio and the pending loss of the gilenya patent, it is also timing that has some in the industry questioning the deal. Ocrelizumab is about two years ahead in development compared to ofatumumab, having completed two successful late-stage studies in June.
In what could be a huge gamble even for the risky business of experimental medications, Swiss drugmaker Novartis has agreed to purchase the rights to the promising autoimmunity drug known as ofatumumab from GlaxoSmithKline (GSK). According to Bloomberg, Novartis will pay GSK $300 million up front and $200 million once late-stage clinical trials begin. GSK could net up to an additional $534 million if certain benchmarks are reached in the development stages. Novartis could also pay GSK as much as 12 percent royalties of future sales of the drug for autoimmune conditions. Novartis already purchased the rights to sell ofatumumab from GSK for the treatment of cancer in March, offering it as the brand name Arzerra. The March deal was one of a series of asset swaps between the two companies totaling over $20 billion. The companies also launched a consumer health joint venture, with Novartis adding to its repertoire of multiple sclerosis and autoimmune treatments. GSK, on the other hand, is increasing its focus on cardiovascular and respiratory medicines, along with vaccine treatments as well.
Ofatumumab is unique among autoimmunity drugs primarily designed to fight multiple sclerosis because it is a fully human antibody, which should reduce the likelihood of autoimmune reactions among patients. Roche has designed a similar drug called ocrelizumab, however, it comes from animal material and then altered to resemble human antibodies. Both drugs attack a specific kind of white blood cell that leads to spinal cord damage among multiple sclerosis patients. Novartis also believes that its drug will “have the potential for better tolerability and safety,” because it is taken in lower doses once per month instead of ocrelizumab, which requires a heavier dose twice per year. Novartis will also likely consider ofatumumab to be a replacement for its second-leading seller, the multiple sclerosis drug gilenya, which grosses the company about $2.5 billion per year. Gilenya’s patent expires in 2019; near the same time that ofatumumab would be ready for Food and Drug Administration (FDA) approval.
While the timing of the purchase is ideal in many respects for Novartis considering its portfolio and the pending loss of the gilenya patent, it is also timing that has some in the industry questioning the deal. Ocrelizumab is about two years ahead in development compared to ofatumumab, having completed two successful late-stage studies in June. Ocrelizumab is expected to hit the market in 2017, whereas 2019 is the best-case scenario for ofatumumab. Fabian Wenner, an analyst for Swiss firm Kepler Cheuvreux is a major critic of the drug and the purchase. Wenner said in a phone interview, “It’s a joke, 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.” Others are not as pessimistic about the drug’s success, but note that the market for multiple sclerosis drugs is crowded, with Novartis marketing two other medications, Extavia and the generic version of Teva’s popular Copaxone, along with drugs made by competitors. London-Based Barclays analyst Michael Leuchten noted that the purchase “fits strategically, but from a timing perspective there’s going to be quite a gap.” Still, the purchase should, at least in theory, help to keep Novartis near or at the top of the autoimmunity drug sector.
Bloomberg Business – Simeon Bennett
New York Times – Amie Tsang and Andrew Pollack
Wall Street Journal – Ian Walker and Denise Roland