BioWorld International Correspondent
Billing it as the biotechnology industry's biggest ever drug deal, Genmab A/S licensed the human monoclonal antibody HuMax-CD20 (ofatumumab) to GlaxoSmithKline plc in a transaction with a total potential value exceeding DKK12 billion (US$2.1 billion) and a guaranteed amount of about DKK2.6 billion.
London-based GSK is paying Copenhagen-based Genmab a license fee of DKK582 million and is making an equity investment in the company valued at about DKK2 billion. The latter part of the transaction comprises about 4.5 million shares, priced at DKK454.65 each, which represents a 50 percent premium to the average price of the share during the preceding 20 trading days on the Copenhagen Stock Exchange. On completion of the equity transaction, GSK would hold 10.1 percent of Genmab's equity.
Genmab could earn up to DKK9 billion in total milestone payments, were HuMax-CD20 to obtain regulatory approval in multiple cancer, autoimmune and inflammatory conditions. It would receive reimbursement for manufacturing and commercialization costs, as well as tiered double-digit royalties on eventual product sales.
Genmab also has obtained an option to co-promote HuMax-CD20 in a "targeted oncology indication" in the U.S. and in the Nordic region. If it pursues that option, it also would gain additional options on co-promoting GSK cancer drugs Bexxar and Arranon in the U.S. and Atriance in the Nordic region.
Genmab will be responsible for development costs until 2008, including costs of two ongoing Phase III trials - in CD20 positive, refractory B-cell chronic lymphocytic leukemia (B-CLL) and in follicular non-Hodgkin's lymphoma. The compound also is undergoing a Phase II trial in rheumatoid arthritis. After 2008, the companies will share development costs equally. GSK will be solely responsible for the manufacturing and commercialization of HuMax-CD20.
Genmab is developing HuMax-CD20 as a rival to Rituxan (rituximab), marketed by South San Francisco-based Genentech Inc. Like Rituxan, it recognizes the CD20 antigen on B cells, and interferes with their activation. Unlike Rituxan, however, it appears to induce complement-mediated cell lysis.
"I think everything's driving the deal - the cancer and the autoimmune disease," Genmab CEO Lisa Drakeman told BioWorld International. "There's so much room for improvement over rituximab," Drakeman said.
GSK was not the only bidder for the compound. "There was very spirited interest from a number of potential partners," Drakeman said. "We were certainly talking to multiple parties right up to the end."
Analyst estimates put the total value of the anti-CD20 market at around $5 billion, Drakeman said. "We think we have a chance to get a very good share of that market, especially with GSK as our partner," she said on a conference call.
The two companies signed the deal early Tuesday morning, after the FDA issued an alert on Monday evening linking the use of rituximab in off-label treatment of systemic lupus erythematosus (SLE) with two new cases of progressive multifocal leukoencephalopathy (PML), a rare demyelinating condition caused by active JC Virus infection in the central nervous system. That news had no effect on the GSK deal, Drakeman said.
The company's share price peaked at DKK484 on the Copenhagen Stock Exchange Tuesday, up almost 24 percent, but it closed at DKK380, a gain of 11 percent.
"A lot of this was factored in [to the share price] already, but it's a very good deal still," Carsten Lønborg Madsen, analyst at Danske Equities in Copenhagen, told BioWorld International. "It's hard to find anything negative" about it.
Annette Rye Larsen, analyst at Gudme Raaschou Bank in Copenhagen, told BioWorld International that it was "a pretty strong" arrangement, and added that she was "very impressed" by the "huge premium for the shares" that GSK paid.