GlaxoSmithKline sells drugs rights to Novartis in $1 billion deal

Novartis AG agreed to buy the rights to an experimental drug from GlaxoSmithKline Plc for as much as $1 billion, bolstering the Swiss company’s lineup of treatments for multiple sclerosis. Novartis now will have the rights for any use of ofatumumab approved by regulators, most importantly multiple sclerosis.

This deal gives the company the rest of the rights to this treatment, which is under development to treat relapsing multiple sclerosis and other types of autoimmune conditions.

Funds as high as $534 thousand is likely to be created if pre-arranged goals are fulfilled.

Glaxo will pay the sum owing in a series of milestone payments and will also pay royalties of up to 12% on any future net sales of ofatumumab in auto-immune indications.

GlaxoSmithKline will reap $300 million up-front and ultimately could receive up to $734 million in milestone payments from the sale of an experimental multiple sclerosis drug to Novartis.

Glaxo said that it had struck a deal to sell the rights to ofatumumab, a treatment for autoimmune conditions, to Novartis Pharma, a subsidiary of the Swiss drug group.

David Epstein, head of Novartis Pharmaceuticals, said in a statement that Novartis is committed to make advancements in the field of neuroscience and to come up with an exciting new treatment to their strong MS portfolio.

Novartis already has an MS remedy referred to as Gilenya, which was the corporate’s second-biggest vendor final yr, with gross sales of $2.5 billion. “Patients either want better convenience than the old drugs or they want better efficacy, and ofatumumab is offering neither of those things. We continue to focus on progressing our pipeline in core therapy areas including HIV, oncology, vaccines, cardiovascular, immuno-inflammation and respiratory diseases”, said David Redfern, Glaxo’s chief strategy officer.

GSK stock dropped 1.33 percent to $42.14 in premarket trading on Friday, following the announcement of the Novartis deal.

Phase three trials of Ofatumumab are not expected to begin until 2018, which puts Novartis three years behind a markedly similar MS drug in development at Roche.