In an 8K filing,
) announced the termination of its agreement with
) related to the commercialization of Prolia (denosumab) for
osteoporosis in certain countries. Investors reacted negatively
to the news with both Amgen and Glaxo shares falling 1.47% and
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As per the original agreement, entered in Jul 2009, both Glaxo
and Amgen agreed to share the commercialization responsibility of
denosumab for the postmenopausal osteoporosis (PMO) indication in
Europe, Australia, New Zealand and Mexico. Amgen retained rights
to the drug (for both PMO and oncology) in the U.S. and Canada
and for all oncology indications in Europe and certain other
In some countries like China, Brazil, India and South Korea,
where Amgen did not have a commercial presence, Glaxo gained the
right to market the drug for all indications.
Terms of Deal Termination
As per the terms of the termination agreement, Glaxo will be
relieved of all commercial activities in all the countries
covered by it under the 2009 agreement, except for Australia, by
the end of this year. Amgen will regain rights to Prolia in these
countries. In exchange, Amgen will make an initial payment and
specific milestone payments of $275 million over the transition
period. Additionally, Amgen will reimburse costs of up to $15
million incurred by Glaxo during this transition period.
However, we note that the termination agreement excludes the
agreement related to the commercialization of denosumab for all
indications in certain countries.
While Glaxo carries a Zacks Rank #4 (Sell), Amgen sports a Zacks
Rank #1 (Strong Buy). Investors may also consider other Zacks
Rank #1 stocks like
Alexion Pharmaceuticals, Inc.