Novartis to pay up to $1 bn for experimental skin drug

Novartis is set to acquire the global rights to a skin-disease drug from developers Galapagos NV and MorphoSys AG for €95 million ($110 million) upfront. Under the deal Novartis will take the anti-IL-17C antibody `MOR106’ forward in atopic dermatitis and other indications, handing over up to €850 million in milestones as it goes.

Including milestone payments, the deal could reach $1 billion as chief executive officer Vas Narasimhan centers the Swiss drugmaker on developing innovative prescription medicines.
Novartis will pay €95 million ($111 million) upfront and later payments of up to €850 million based on the drug reaching certain regulatory, commercial and sales goals, MorphoSys said in a statement on Thursday. The payments will be split 50-50 between Mechelen, Belgium-based Galapagos and Planegg, Germany-based MorphoSys.
Novartis also agreed to pay royalties to Galapagos and MorphoSys in a range of up to low teens and low 20s as a percentage of sales. MorphoSys raised its 2018 forecasts, with a new sales range that’s about triple the old one and a smaller operating loss.
The experimental antibody known as MOR106 targets a severe form of eczema and will join Novartis’s current portfolio for skin ailments that includes Cosentyx for psoriasis, and Xolair, an asthma drug also prescribed for chronic hives, bolstering Novartis’s dermatology business.
Atopic dermatitis, which MOR106 aims to treat, is a severe form of eczema that causes the skin to itch, flake, ooze or bleed. It affects an estimated 8 per cent of adults and 14 per cent of children worldwide, who have few treatment options, according to Novartis. The Swiss company already has an experimental medicine in mid-stage tests against the disease bought in 2016.
Galapagos and MorphoSys discovered MOR106 through a 50-50 joint R&D pact they formed in 2008. The partners focused their efforts on IL-17C in a belief it may act as an amplifier of local inflammation in skin diseases including atopic dermatitis. With phase 1 safety data and preclinical efficacy data in the bag, Galapagos moved the anti-IL-17C antibody into a phase 2 atopic dermatitis trial in May.
Now, with its acquisition, Novartis will bankroll the phase 2 study and a planned phase 1 trial of a subcutaneous formulation of the drug. MorphoSys and Galapagos will remain involved in the clinical development of MOR106 but Novartis will have full ownership and bear all the costs.
Novartis could explore the drug’s potential in other indications, a route already travelled by Sanofi and Regeneron, which tested Dupixent on nasal polyps and a form of inflammation of the esophagus, among others.
The deal will help Novartis challenge Sanofi and Regeneron Pharmaceuticals, whose drug for atopic dermatitis Dupixent went on sale last year.