Abbott Pays Top Dollar For Galapagos’ Autoimmune Drug

As its pharma division separates from its diversified medical products unit, Abbott obtains another drug that could succeed Humira in rheumatoid arthritis and related indications.

In the midst of its breakup, Abbott Laboratories Inc. has bolstered the pipeline of its soon-to-be-separate pharma division, thanks to an agreement with Galapagos NV that gives it another potential successor to the blockbuster autoimmune drug Humira (adalimumab).

The $150 million up-front component of the deal is already large for a compound upon which one Phase IIa study in rheumatoid arthritis has been completed and a Phase IIb is about to commence. A second licensing payment of $200 million, which Abbott would deliver if the Phase IIb study results meet a set of predetermined but undisclosed criteria, would make the deal exceptionally rich. Further milestone payments could add $1 billion more to the agreement, while Galapagos would receive a double-digit royalty percentage if the drug is ever commercialized.

Abbott gets global rights to orally administered GLPG0634, the lead program in Galapagos’ pipeline of autoimmune drugs. The compound selectively inhibits the JAK1 enzyme, one of four subtypes of Janus kinases, interfering with signaling on a pathway implicated in oncology and autoimmune disorders (Also see "JAK Of All Trades: Janus Kinase Inhibitors Are Ready, Willing And Orally Available For Many Diseases" - Pink Sheet, 1 Feb, 2011.). In November, Galapagos said GLPG0634 showed strong efficacy in a four-week proof-of-concept trial, while exhibiting little effect on anemia or lipids and displaying no adverse effects. A dose-range-finding trial is expected to follow in the coming months.

In a conference call with analysts following the deal’s announcement, Galapagos CEO Onno van de Stolpe said all of the potential partners with whom Galapagos had negotiated had high hopes for GLPG0634. “They all agreed that this compound had potential to become the best-in-class,” he said. Multiple suitors submitted term sheets with comparable deal values, with different degrees of up-front commitment versus back-loaded payments, he said.

While GLPG0634 is still in the middle stages of development, Abbott clearly sees it as a potential successor to Humira, one of the world’s best-selling drugs. Humira brought in $7.9 billion of Abbott’s $17 billion in worldwide net sales of proprietary pharmaceuticals in 2011. Launched in 2003 to treat rheumatoid arthritis, Humira has received add-on approvals for multiple autoimmune indications, including psoriatic arthritis, ankylosing spondylitis, psoriasis, juvenile idiopathic arthritis and Crohn’s disease.

Key U.S. composition-of-matter patents for Humira, which blocks tumor necrosis factor, are set to expire in December 2016, while GLPG0634’s timeline points to a 2017 market introduction. But some believe the injectable Humira could be vulnerable to competition from an orally administered drug or a lower-priced compound in the meantime, prior to the expiration of its patent protection. Just last week, on March 2, Roche-owned Genentech Inc. released preliminary results of a Phase IV head-to-head study showing its Actemra (tocilizumab) displayed superior efficacy to Humira as monotherapy for rheumatoid arthritis. Although the study likely has limited implications, since Humira is usually given with methotrexate and works best in combination with that drug, it exemplifies the reality of near-term threats.

Pfizer Inc. has tofacitinib, an inhibitor of the JAK3 subtype of Janus kinases, in Phase III for rheumatoid arthritis. In September, Pfizer released data showing equal efficacy to Humira, although its safety profile remained in question (Also see "Tofacitinib Data Is In: As Effective As Humira, But Safety Remains A Question" - Pink Sheet, 12 Sep, 2011.). Meanwhile, Lilly paid $90 million up front for global rights to Incyte Corp.’s INCB28050, an orally available JAK1/JAK2 inhibitor, in a December 2009 deal. Primary endpoint results from a Phase IIb trial on that drug, now known as LY-3009104, are expected during the first half of 2013.

Soon-To-Be-Independent Pharma Division Gets Another RA Drug

For Abbott, the deal comes as the diversified health care giant subdivides into two separate, publicly traded companies. In October, the Abbott said it would spin out its pharma division under a new name, while its diversified medical products unit would retain the Abbott name (Also see "Abbott To Split Into Two Publicly Traded Companies Over Next 12 Months" - Pink Sheet, 19 Oct, 2011.).

The new tie-up with Galapagos comes eight months after Abbott licensed another autoimmune drug studied for rheumatoid arthritis and psoriasis. Abbott paid $85 million up-front to license Biotest AG’s Phase II candidate BT-061, which affects immune responses by binding to the protein CD4, thereby activating regulatory T cells that slow overreactions of the immune system (Also see "Abbott Refreshes Rheumatoid Arthritis Strategy By Licensing Biotest's Phase II Candidate" - Pink Sheet, 22 Jun, 2011.). Milestone payments could push that deal’s value to $480 million, if the drug is commercialized.

Abbott withdrew applications for marketing approval of another psoriasis drug, the interleukin blocker Ozespa (briakinumab), in early 2011.

Abbott has shown a willingness to pay top dollar for promising candidates it sees as potential blockbusters. For example, the company has twice licensed compounds from Reata Pharmaceuticals Inc. for eye-popping numbers, including a September 2010 deal worth $450 million up-front for rights outside the U.S. to chronic kidney disease drug bardoxolone, then at the end of Phase II (Also see "Abbott Pays $450MM Up-Front For Rights To Reata's CKD Drug" - Pink Sheet, 23 Sep, 2010.). Late in 2011, Abbott obtained a worldwide license to a group of Reata’s preclinical antioxidant inflammation modulator compounds for $400 million up-front, the most ever paid for pre-clinical assets (Also see "Abbott Pays $400 Million Upfront For Reata’s Preclinical AIM Programs" - Pink Sheet, 12 Dec, 2011.).

Under the terms of the Galapagos deal, Abbott will pay for all Phase III development and manufacturing costs of GLPG0634. Galapagos retains an option to co-promote the drug in its home country of Belgium as well as the Netherlands and Luxembourg. Onno van de Stolpe, in response to an analyst’s question, said that although the territory is small, the co-promote experience “will allow us to build a commercial infrastructure” in anticipation of Galapagos bringing its own products to market. He singled out a cystic fibrosis candidate as the company’s lead proprietary compound.

The deal boosts Galapagos’ balance sheet as it continues to advance other compounds through its pipeline. In a mid-year report, the company said it has nearly €50 million ($66.6 million) in cash and cash equivalents as of June 30, 2011; a new report is anticipated March 2. The company has an immune-inflammation partnership covering three drugs with GlaxoSmithKline PLC. Two have reached first-in-human trials; Galapagos said last week that GSK paid an option fee worth less than €10 million for the drugs.

Galapagos has two unpartnered assets in Phase I, integrin receptor antagonist GLPG0187 for metastatic cancer and selective androgen modulator GLPG0492 for cachexia, the loss of weight and muscle mass.