Biogen Strikes Licensing Deal - Analyst Blog

Biogen Idec (BIIB) recently entered into an exclusive licensing agreement with Knopp Neurosciences for the development and commercialization of KNS-760704 for the treatment of amyotrophic lateral sclerosis (ALS) or Lou Gehrig’s disease and other potential indications.

 

 

Per the terms of the deal, Knopp stands to receive up to $345 million from Biogen in addition to royalties. The payments include an upfront amount of $20 million and $60 million for the purchase of Knopp stock. Besides this, Biogen could make additional milestone payments of up to $265 million which will become due on the achievement of development, regulatory, and sales targets. Knopp will also be entitled to receive tiered, double-digit royalties on worldwide sales.

 

While Biogen will be responsible for the development and worldwide commercialization of KNS-760704 for ALS, Knopp will provide development support and conduct certain commercialization activities in the US as may be required by Biogen.

 

ALS is a terminal disease in which the life expectancy after the onset of disease is 3-5 years. Phase II results on KNS-760704 showed that the candidate demonstrated favorable dose-related efficacy in preserving motor function and prolonging survival.

 

It is estimated that about 20,000 people suffer from the disease in the US. Meanwhile, worldwide about 2 out of 100,000 people are afflicted by the disease. KNS-760704 enjoys orphan drug status in both the US and the EU for the ALS indication. The candidate also enjoys fast track status in the US. 

 

Biogen is looking to move the candidate into phase III development in the first half of 2011. Currently, only one therapy, Sanofi-Aventis’ (SNY) Rilutek, is approved for the treatment of ALS. KNS-760704’s ability to slow the rate of disease progression and improve the survival rate could help the candidate gain share once launched.

 

 

We currently have an Outperform recommendation on Biogen, which is supported by a Zacks #2 Rank (short-term “Buy” rating). Key products, Avonex and Tysabri, continue to contribute significantly to sales and we expect Biogen to maintain its leading position in the multiple sclerosis market. The company is working on building its pipeline through acquisitions and in-licensing deals. Although we remain concerned about an increase in the occurrence of progressive multifocal leukoencephalopathy (PML) in patients using Tysabri, we remain positive on the stock based on the second quarter performance and improved outlook for 2010.