December 10, 2007 / 12:48 PM / 12 years ago

UPDATE 2-Glaxo boosts pipeline with two new biotech deals

(Adds background, latest shares)

By Ben Hirschler

LONDON, Dec 10 (Reuters) - GlaxoSmithKline Plc (GSK.L), Europe’s biggest drugmaker, continued its recent rapid pace of deal-making on Monday by signing two new early-stage biotech alliances in cancer and anti-infective medicine.

The deals with privately owned U.S. cancer specialist OncoMed Pharmaceuticals and Belgium’s Galapagos NV GLPG.BR involve limited upfront investment. But Glaxo could make multibillion-dollar milestone payments if the products succeed.

Glaxo, like many large drugmakers, is hungry to find promising new drugs from outside its own laboratories and has stepped up its external collaboration efforts in the past year.

Further deals could be forthcoming as the year-end approaches, some analysts say.

Under the alliance with OncoMed, worth up to $1.4 billion or more, Glaxo has secured access to the Californian company’s novel antibodies that target cancer stem cells.

Cancer stem cells are believed to play a key role in the establishment, metastasis — or spread — and recurrence of cancer.

The collaboration gives Glaxo an option to license four product candidates from OncoMed’s library of monoclonal antibodies and increases its growing presence in oncology, the two companies said in a joint statement.

OncoMed will receive an undisclosed initial cash payment as well as an equity investment. In addition, it is eligible to earn milestone payments up to $1.4 billion from Glaxo, if certain clinical projects are commercially successful.

OncoMed will also get double-digit percentage royalties on eventual product sales, while Glaxo will have an option to invest in a future OncoMed initial public offering.


Separately, Glaxo has struck an alliance with Galapagos to discover and develop new anti-infective medicines against up to six targets based on Galapagos’s natural product drug-delivery platform.

Galapagos will receive up to 3.5 million euros ($5.10 million) in technology access fees and up to 215 million euros ($315.1 million) in total payments for each marketed product.

Galapagos will be responsible for the discovery and development of natural product small molecule drug candidates through to “proof of concept” in clinical trials, at which point GSK will have exclusive option to license each compound for further development and commercialisation on a worldwide basis.

Shares in Galapgos were 3.4 percent higher by 1434 GMT, while Glaxo was 0.8 percent lower in a slightly weaker European pharmaceuticals sector .SXDP.

The move reflects Glaxo’s decision to place more emphasis on developing new antibiotics and anti-virals, after announcing in February it was setting up a new drug-discovery unit devoted to infectious diseases.

Other recent Glaxo licensing deals include an October agreement with Synta Pharmaceuticals Corp SNTA.O for rights to its experimental skin cancer drug, which could eventually earn the U.S. firm more than $1 billion, and a potential $1.5 billion brain drug deal with Targacept Inc TRGT.O in July.

In November, Glaxo agreed to buy privately held heart drug specialist Reliant Pharmaceuticals for $1.65 billion. (Editing by Louise Ireland)

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