With a biologics license application pending for the psoriasis drug Raptiva (efalizumab) at the FDA, Genentech Inc. and Serono SA said they are expanding their overseas development and marketing agreement to add 15 Asian companies to an existing deal that covered Europe.
"Clearly, for [a company the size of] Genentech, these are not markets that are going to be hugely impactful to the bottom line - minimally impactful would be a better way to put it," said Adam Walsh, senior biotechnology research analyst for Jefferies & Co. in San Francisco.
The new deal means Serono, of Geneva, Switzerland, has rights worldwide outside the U.S., except in Japan, where Genentech has rights. In the U.S., rights are shared by Genentech and partner XOMA Ltd., of Berkeley, Calif. Financial terms were not disclosed by either company.
XOMA is a better tracking stock to examine regarding Raptiva, Walsh told BioWorld Today. "It's clearly their lead product," he said. "We've got a buy on it, and it's been getting beat up pretty badly the past couple of weeks."
That company's shares (NASDAQ:XOMA) ended Thursday at $3.18, down 19 cents. Walsh said concerns about psoriasis flare-ups after patients were removed from Raptiva after 12 weeks during a trial might be causing the skepticism.
"That was a trial artifact, but is not the way it's going to be used," he said. "Patients will likely be tapered down if they're going to stop it."
Genentech and XOMA, he added, are "running tapering trials, and we hear the data are complete," with favorable results to be released possibly in March.
The powerhouse Serono, which racked up worldwide revenues of $1.54 billion last year, said it expects to file for approval of Raptiva in Europe in the first quarter of this year.
"We're on track with that," said Tara Cooper, corporate affairs manager for Genentech. "I would say it's very soon." Filings will take place in most of the Asian countries in the first half of 2004, she added.
In its expanded arrangement with Serono, Genentech gets the former's marketing expertise in Asia plus what Walsh estimates to be "modest" milestone payments and royalties between 15 percent and 20 percent on Raptiva sales, with royalties of about 5 percent from Genentech to XOMA.
Raptiva, a recombinant humanized monoclonal antibody for psoriasis that also is in Phase II trials for rheumatoid arthritis, is expected to be in the FDA's hands for about 10 months before the agency's decision on approvability.
"We expect something in the fall," Cooper said.
The 15 countries added to the Genentech/Serono agreement, which was begun in August 2002, are China, South Korea, Taiwan, Hong Kong, Singapore, Malaysia, Thailand, the Philippines, Indonesia, Vietnam, Cambodia, Laos, Nepal, Myanmar and Brunei.
Genentech's deal with Serono for Raptiva in Europe began in the summer of 2002, and terms were undisclosed. (See BioWorld Today, Aug. 9, 2002.)
Neither Cooper nor Walsh could estimate the market in the 15 Asian countries, but the overseas analyst for Walsh's firm put the sales numbers at $60 million for 2004, $147 million for 2005 and $270 million for 2006.
Genentech's stock (NASDAQ:DNA) closed Thursday at $35.54, down 3 cents. Serono's shares (NYSE:SRA) fell 18 cents to close at $11.85.