Danish biotechnology company Genmab A/S signed a deal Tuesday worth up to US$2.1 billion (€1.6 billion) with pharmaceutical giant GlaxoSmithKline PLC for the global commercialization of a leukemia treatment.
The agreement for the HuMax-CD20 antibody includes an initial license fee of 582 million kroner (€78 million; US$102 million), Glaxo buying a stake of just over 10 percent in Genmab and milestone payments totaling 9 billion kroner (€1.2 billion; US$1.6 billion).
GlaxoSmithKline will invest 2.03 billion kroner (€272 million) for the 4.47 million Genmab shares.
Analysts said the value of the deal was much higher than expected, and could mean that Genmab will be profitable as early as next year.
"This is fantastic," said Carsten Madsen, analyst at Danske Bank. "It's a major deal with a well-established pharma player and it's difficult to find anything bad about this deal."
SNS Securities analyst Marcel Wijma said the highest analyst expectation was for a US$650 million (€496 million) deal, including milestone and upfront payments, and his own expectation was for US$500 million (€382 million).
Genmab shares rose 16.1 percent to 397 kroner (€53.27; US$69.75) in Denmark, while shares in GlaxoSmithKline, the world's second-largest pharmaceutical company, were down 0.6 percent to 1,336 pence (€19.93; US$26.1) on the London Stock Exchange.
"The stake and the deal buy GSK a viable pipeline product in HuMax-CD20 that to us has better risk dimensions than many of GSK's own pipeline candidates," analysts at Bernstein Research said in a note to investors. "GSK is still in need of new sources of growth to quell fears of too high a reliance on product line extensions."
Glaxo, which also has the Seretide/Advair drug for asthma and the Avandia family of diabetes drugs, announced in October that it beat analyst forecast with a 15 percent jump in third-quarter earnings and raised its full-year earnings guidance. But the company disappointed the market by revealing it had pushed back the date it plans to file its cervical cancer vaccine Cervarix in the United States.
HuMax-CD20 is a human antibody going through phase III clinical trials for treating chronic lymphocytic leukemia and non-Hodgkin's lymphoma. It is also in phase II trials for treating rheumatoid arthritis and chronic lymphocytic leukemia in patients who have perviously not been treated.
source - The International Herald Tribune