GlaxoSmithKline and Novartis make a deal over cancer drug

GlaxoSmithKline plc and Novartis AG said Friday that they had struck a deal for Novartis to pay GSK at least $300 million, and perhaps more than $1 billion, for the remaining rights to the drug ofatumumab.

The drug already is approved for use in treating some cancers and is sold by Novartis under the name Arzerra. Novartis now will have the rights for any use of ofatumumab approved by regulators, most importantly multiple sclerosis.

GSK gets $300 million when the deal is closed, $200 million if Novartis starts a phase III clinical study of ofatumumab in relapsing remitting multiple sclerosis, and contingent payments of up to $534 million if other development milestones are achieved. GSK would get royalties of 12 percent on any future net sales of ofatumumab in autoimmune indications.

GSK had sold the cancer indication as part of a multibillion-dollar deal with Novartis in 2014. GSK kept oncology programs in its pipeline, but sold existing oncology drugs in exchange for the Novartis vaccine portfolio and a majority position in a new joint venture to sell over-the-counter consumer products.

Novartis competes with Roche Holding AG and Teva Pharmaceutical Industries Ltd. in multiple sclerosis drugs. A key Novartis MS drug will lose patent protection in the next few years. Novartis' Sandoz generic division sells the first generic version of Teva's 20mg Copaxone medication.

"Novartis is pleased to further reinforce our commitment to neuroscience and to add an exciting new treatment to our strong MS portfolio," David Epstein, head of Novartis Pharmaceuticals, said 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."

Bloomberg News quoted one financial analyst as saying the deal was bad for Novartis.

"It's a joke," Fabian Wenner, an analyst with Kepler Cheuvreux in Zurich, Switzerland, told Bloomberg. "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."