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Companies bonded by blood
SAN FRANCISCO—Biotechnology company Biogen Idec Inc. will pay a $31.5 upfront fee to join Genentech Inc. and F. Hoffmann-La Roche Ltd. in the development and commercialization of GA101, a potential treatment for blood cancer, the companies announced late last month.
Genentech paid Roche $105 million in October for U.S. development and commercialization rights to GA101, a novel humanized anti-CD20 monoclonal antibody developed by Roche group member Glycart Biotechnology AG. Biogen Idec will pay Genentech $31.5 million upfront and share certain development costs, operating profits and losses within the United States. Roche retains commercialization rights outside the United States. Additional financial and other terms were not disclosed.
Engineered to increase both direct- and immune-mediated target cell death for the potential treatment of hematologic malignancies, GA101 is currently in Phase I/II clinical trials for non-Hodgkins lymphoma (NHL) and chronic lymphocytic leukemia (CLL). GlycArt and Roche plan to provide an update on Phase I data for GA101 at the American Society of Hematology Annual Meeting in December.
According to Naomi Aoki, director of public affairs for Biogen Idec, the company had certain rights to opt-in to the agreement based on its current collaboration with Genentech on the U.S. development of NHL and rheumatoid arthritis drug Rituxan. In early October, the companies reported that Rituxan slowed the progress of chronic lymphocytic leukemia in a late-stage clinical trial, meeting its primary goal.
"We have had a very successful relationship with Genentech, and as part of our existing agreement to collaborate on anti-CD20 monoclonal antibodies, if Genentech signs a licensing agreement with another company, we have a 30-day window to decide whether we want to participate in that agreement," Aoki says.
Genentech recently reported that U.S. net sales of Rituxan were $655 million in the third quarter, which could spur Roche's already eager interest in purchasing the 44 percent of Genentech it doesn't already own, according to some analysts. However, Caroline Pecquet, a spokeswoman for Genentech, declines to speculate on how the partnerships would affect Roche's bid, saying, "there is no pre-determined outcome to Roche's proposal."
"For now, we feel this collaboration complements our existing research program and is an innovative program that may have the potential to offer new treatments for cancer patients," Pecquet adds.
A possible Roche-Genentech merger would not alter its agreement with Genentech, but give it the added benefit of royalty sharing. "Roche has marketing rights for Rituxan outside of the U.S., so we would still have a co-marketing relationship with the companies for the U.S., but they would pay us royalties on ex-U.S. sales," she says. "We have has a very productive relationship with the companies, so we think if the new, merged entity became our partner, we would continue to be productive."
Following the announcement Oct. 30, Genentech shares rose $2.39, or 3 percent, to close at $82.75. Biogen Idec shares took a hit, however, on the news that a patient taking its multiple sclerosis (MS) drug Tysabri developed a fatal brain infection, falling $1.64, or 3.9 percent, to close at $40.30. Shares gained ground the next week as analysts issued upgrades with positive outlooks for the company's MS drugs.
"We are upgrading shares of [Biogen Idec] from hold to buy because we now believe the longer term risk/reward is heavily skewed to the upside," wrote Deutsche Bank analyst Mark Schoenebaum in a note to investors. "Although the stock may take time to work, we believe upside could approximate +15 percent to 40 percent, while sustainable downside is likely limited to about 10 percent." DDN