In Puzzling Move, Novartis AG Offers $1 Billion for GlaxoSmithKline’s Ofatumumab for Auto-Immune Diseases

Published: Aug 25, 2015

In Puzzling Move, Novartis Offers $1 billion for GlaxoSmithKline’s Ofatumumab for Auto-Immune Diseases
August 21, 2015
By Mark Terry, Breaking News Staff

Switzerland-based Novartis announced today that it has acquired the remaining rights to Ofatumumab from UK-based GlaxoSmithKline in a deal that could exceed $1 billion.

Novartis earlier bought the rights to Ofatumumab for oncology. It is marketed as Arzerra. This current deal is for the rights to develop and commercialize the drug for multiple sclerosis (MS). Ofatumumab is a fully human monoclonal antibody that binds to the CD20 molecule that is on the surface of B cells, depleting them from lymph tissues. Relapsing remitting multiple sclerosis (RRMS) is believed to be associated with the activation of B cells.

Previous Phase IIa clinical trials with the drug indicated a decrease of up to 90 percent in the total number of new brain lesions in patients with MS between the fourth and twelfth weeks in the study. The drug will soon start Phase III pivotal trials.

Under this deal, Novartis will pay $300 million to GSK up front, and an additional $200 million at the start of the Phase III study by Novartis. Another $534 million in milestone payments are up for grabs. GSK will receive royalties up to 12 percent from Novartis on any future sales of the drug in auto-immune conditions.

Novartis is pleased to further reinforce our commitment to neuroscience and to add an exciting new treatment to our strong MS portfolio,” said David Epstein, head of Novartis Pharmaceuticals in a statement. “Our vision for patients with MS is to develop treatments that improve on current standards of care, meeting patients’ needs at every stage of their disease with innovative and targeted drugs.”

Currently the biggest competitor is Roche’s ocrelizumab. Last month Roche announced positive data from two studies that compared ocrelizumab with interferon beta-1a (Rebif), standard care for MS. The two studies, OPERA I and OPERA II met their primary and major secondary endpoints, cutting the annualized relapse rate (ARR) over a two-year period. The company plans to submit the data to the U.S. Food and Drug Administration (FDA) and EU regulatory programs at the beginning of 2016.

This makes Novartis’ acquisition and efforts to develop Ofatumumab for MS a little puzzling. If Roche’s ocrelizumab is approved next year, it could be on the market in 2017. If Novartis’s efforts with Ofatumumab are successful, it would likely not be on the market until 2019.

“It’s a joke,” Fabian Wenner, an analyst at Kepler Cheuvreux in Zurich said in an interview with Bloomberg Business. “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.”

Novartis already offers Gilenya for the treatment of MS. In 2014, Gilenya brought in $2.6 billion, the company’s second biggest seller. However, Gilenya loses patent protection in 2019. It’s possible Novartis is developing Ofatumumab as a sort of safety net to minimize the projected losses if generics for Gilenya are developed. “It fits strategically,” said Michael Leuchten, an analyst at Barclays Plc in London to Bloomberg, “but from a timing perspective there’s going to be quite a gap.”

It’s possible, of course, that some of the thinking behind the acquisition focuses on “other auto-immune conditions,” and Novartis believes it can expand the applications for the drug beyond cancer and multiple sclerosis. B cells are implicated in a number of auto-immune diseases, including systemic lupus erythematosus, rheumatoid arthritis, scleroderma, and type 1 diabetes, as well as multiple sclerosis.

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