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 will pay $300 million upfront to Glaxo for ofatumumab, followed by another $200 million after the start of late-stage clinical trials, the Basel, Switzerland-based company said in a statement on Friday. Novartis may pay as much as another $534 million if certain goals are met during the drug’s development, according to the statement.
The drug would compete with Roche Holding AG’s experimental medicine ocrelizumab, which succeeded in reducing the relapses and disability progression associated with multiple sclerosis in two late-stage studies announced in June. Novartis already has an MS treatment called Gilenya, which was the company’s second-biggest seller last year, with sales of $2.5 billion.
Fabian Wenner, an analyst at Kepler Cheuvreux in Zurich who advocates buying Novartis shares, said the purchase of ofatumumab for MS isn’t a great move.
“It’s a joke,” Wenner said by phone. “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 shares fell 1.2 percent to 96.35 euros as of 9:18 a.m. amid a decline in stocks in Europe.
Ofatumumab is a monoclonal antibody that causes depletion of white blood cells in the immune system that play an important role in MS. Multiple sclerosis is a progressive central nervous system disorder that disrupts brain and spinal-cord functioning.
Novartis will also pay royalties of up to 12 percent to Glaxo on any future net sales of ofatumumab for autoimmune conditions. Novartis had previously acquired rights to the medicine as a cancer treatment, marketing it under the brand name Arzerra.
Novartis and Glaxo completed a deal in March in which the Swiss company gained cancer drugs and London-based Glaxo added to its vaccines business. The two also created a consumer health joint venture.
By Phil Serafino and Simeon Bennett