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Biogen (BIIB) in Autoimmune Disease Deal Worth Up To $544M

Biogen BIIB has signed up with Mitsubishi Tanabe Pharma Corporation for the development and commercialization of the latter's MT-1303, an oral compound that targets the S1P receptor. Biogen will get worldwide (excluding Asia) rights to MT-1303 under the exclusive licensing deal, which could see the company shelling out up to $544 million to Mitsubishi including a $60 million upfront payment.

MT-1303 has the potential to be developed for several autoimmune indications including multiple sclerosis (MS), ulcerative colitis (UC) and Crohn's disease. Biogen said that the candidate has successfully completed a phase II study for MS and the company intends to move ahead rapidly with this indication. Plans are also on to start a study for UC and move the candidate into phase III for Crohn's disease.

With this deal, slated to close in the fourth quarter, Biogen is looking to strengthen its pipeline. The company has been under pressure recently given a series of setbacks (disappointing results, a lowered outlook for 2015, a slowdown in Tecfidera's growth rate). Adding a S1P receptor modulator to its pipeline makes sense for the company, which has a strong presence in the MS market. Moreover, the successful development of MT-1303 would give Biogen the opportunity to diversify into the UC and Crohn's disease market. The price also looks fine given the immense commercial potential in the target markets. A safety profile better than existing S1P receptor modulators like Gilenya (approved for MS, patients using Gilenya have to be monitored for a decrease in heart rate on starting the drug) would give Biogen's candidate an edge.

However, MT-1303 is not the only S1P receptor modulator in development. In fact, MT-1303 is a few years behind Celgene Corporation's CELG ozanimod, which is currently in late-stage development for UC (data expected in 2018) and relapsing MS (data due in the first half of 2017). Ozanimod became a part of Celgene's pipeline following its $7.2 billion acquisition of Receptos and could well become the first S1P receptor modulator to gain approval for inflammatory bowel diseases. Ozanimod could also have an advantage over existing treatments if it is able to maintain its previously demonstrated cardiac, hepatotoxicity and lymphocyte recovery profile.

Both Biogen and Celgene are Zacks Rank #3 (Hold) stocks. A couple of better-ranked stocks in the biotech sector are Gilead Sciences Inc. GILD and Regeneron Pharmaceuticals, Inc. REGN - both are Zacks Rank #1 (Strong Buy) stocks.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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