GlaxoSmithKline flips an MS project to Novartis for up to $1B

GSK Chief Strategy Officer David Redfern

Novartis ($NVS) is paying GlaxoSmithKline ($GSK) as much as $1 billion for the rights to a mid-stage multiple sclerosis treatment, betting it can develop an heir to the blockbuster Gilenya, soon to lose patent protection.

Under the deal, Novartis will pay $300 million up front for GSK's ofatumumab, an antibody designed to block the CD20 protein. The Swiss drugmaker will hand over another $200 million once the treatment enters its first Phase III MS trial and up to $534 million more tied to development milestones. GSK is also due as much as 12% of future ofatumumab sales in MS and any other autoimmune indication, Novartis said.

For Novartis, the deal is part of a broader effort to find a successor for Gilenya, which brought in about $2.5 billion last year but is poised to face generic competition as soon as 2019. Ofatumumab now joins the Phase III BAF312 in Novartis' MS pipeline, which also includes secukinumab, an interleukin-17 inhibitor already approved to treat psoriasis. The acquisition also gives Novartis full control of ofatumumab; it picked up the injection's oncology applications in its $16 billion buyout of GSK's cancer division last year.

For GSK, selling off the MS treatment is part of a broader effort, "crystallizing significant additional value" for shareholders while investing in the areas the U.K. drugmaker can lead, Chief Strategy Officer David Redfern said.

"We continue to focus on progressing our pipeline in core therapy areas including HIV, oncology, vaccines, cardiovascular, immuno-inflammation and respiratory diseases," Redfern said in a statement. "We believe GSK's pipeline has significant potential to drive long-term performance for the group and will be profiling it further at our R&D event in November."

- read Novartis' statement
- here's GSK's release