GSK to divest ofatumumab for auto-immune indications to Novartis for up to $1 billion plus royalties

GlaxoSmithKline (GSK) has announced an agreement with Novartis Pharma AG (“Novartis Pharma”), a subsidiary of Novartis AG, to divest its rights in ofatumumab for auto-immune indications, including multiple sclerosis.

Novartis Pharma previously acquired the oncology indications for ofatumumab (Arzerra) as part of the major three-part transaction between GSK and Novartis that completed earlier this year. After completion of the transaction, Novartis Pharma will own rights to ofatumumab in all indications.

The consideration payable by Novartis Pharma to GSK may reach up to $1,034 million and comprises a series of milestone payments as follows:

•  $300 million payable at closing
•  $200 million payable subject to the start of a Phase III study in relapsing remitting multiple sclerosis by Novartis
•  further contingent payments of up to $534 million payable on the achievement of certain other development milestones.

Novartis Pharma will also pay royalties of up to 12% to GSK on any future net sales of ofatumumab in auto-immune indications.

David Redfern, Chief Strategy Officer at GSK, said: “We are pleased to have completed this transaction to divest the remaining rights in ofatumumab, crystallising significant additional value for GSK shareholders. We continue to focus on progressing our pipeline in core therapy areas including HIV, oncology, vaccines, cardiovascular, immuno-inflammation and respiratory diseases. We believe GSK’s pipeline has significant potential to drive long-term performance for the Group and will be profiling it further at our R&D event in November.”

This agreement with Novartis Pharma is subject to the expiry of any waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions. The transaction is expected to complete by the end of 2015.