Roche joins Novartis' billion-dollar bet on Ophthotech's eye drug

Roche's ($RHHBY) Genentech is pairing up with Novartis ($NVS) to split the ex-U.S. rights to an Ophthotech ($OPHT) eye drug, opting into an agreement that could be worth more than $1 billion.

Novartis bought into Ophthotech's pegpleranib, a treatment for wet age-related macular degeneration, in a 2014 deal, paying its partner $200 million up front and promising more than $800 million down the line in milestone payments. Under a pre-existing agreement, Genentech had the right to split ex-U.S. rights with Novartis, and the California biotech has now exercised that option.

The deal changes little for Ophthotech, which retains control of the ongoing Phase III development of its drug and sole rights to the treatment's future in the U.S. Pegpleranib, to be marketed as Fovista, is in the midst of two late-stage trials in combination with Genentech's Lucentis, and Ophthotech expects to report data from each in the fourth quarter of next year. The company has also begun enrollment in a third Phase III trial matching pegpleranib with Roche's Avastin and Regeneron Pharmaceuticals' ($REGN) Eylea, agents that work the same way as Lucentis.

The plan, for Ophthotech, is to develop an efficacy-boosting add on to those blockbuster medicines. Pegpleranib is an anti-platelet-derived growth factor, or anti-PDGF, agent designed to stop the errant growth of new blood vessels tied to AMD. Lucentis and its rivals work by blocking vascular endothelial growth factor, or VEGF, and Ophthotech believes combining the two approaches could create a market-leading treatment option for the growing number of people with AMD.

Novartis bought the ex-U.S. rights to Lucentis back in 2003, years before Roche acquired Genentech for more than $45 billion.

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