Celltech close to signing arthritis drug deal
By Ben Hirschler, European Pharmaceuticals Correspondent
LONDON, March 16 (Reuters) - Britain's Celltech Group Plc said on Tuesday it expected to sign a lucrative marketing deal for its biggest new drug hope during the second quarter of 2004, boosting its shares more than three percent.
Goran Ando, the Swedish chief executive of Britain's leading biotechnology group, told Reuters he had narrowed the list of potential partners for arthritis drug CDP 870 down to four firms from more than 20.
The winner will be announced following results of a key Phase III study in rheumatoid arthritis, which is expected to conclude later this month.
Ando said CDP 870, which Celltech (LSE: CCH.L - news - msgs) plans to market on its own in the treatment of Crohn's disease, a bowel disorder, was a potential $1 billion-a-year seller.
Confirmation that Celltech is on track to find a new partner for the drug, which was handed back by Pfizer Inc (NYSE: PFE - news) late last year, came as Celltech reported in-line 2003 results.
"It certainly makes them appear more confident...there is clearly plenty of interest in the product and hopefully they will be able to get decent terms out of the negotiations," said Mike Booth of Canaccord Capital, who rates the stock a "buy".
CDP 870, an injectable antibody-based medicine which could reach the market in 2006 for Crohn's and the following year for arthritis, is the main investment driver at Celltech.
It belongs to a group of drugs that block TNF-alpha, a protein implicated in autoimmune diseases such as rheumatoid arthritis, Crohn's and psoriasis.Other products in the class include Johnson & Johnson (NYSE: JNJ - news) 's Remicade, Amgen Inc (NASDAQ: AMGN - news) 's Enbrel and Abbott Laboratories Inc's Humira.
Although CDP 870 is a relatively late entrant, industry analysts believe it may have medical and cost advantages, guaranteeing strong interest from potential partners.
Shares in Celltech were 3.5 percent higher at 414 pence by 0940 GMT in a lower European market for drug stocks.
SEEKING U.S. CLOUT
Ando said his shortlist included both pharmaceutical and biotech concerns with a strong presence in the United States.
"As we are looking primarily for a deal outside of Europe, you will not be surprised to learn that they are either U.S. companies or European companies with a strong U.S. presence," he said in a telephone interview.
He declined to identify the parties but Canaccord's Booth tipped likely candidates as GlaxoSmithKline Plc (LSE: GSK.L - news - msgs) , Aventis SA , Biogen Idec Inc and Serono SA (Virt-X: SEO.VX - news) .
Ando said a new deal would offer as good or better terms for Celltech shareholders as the previous arrangement with Pfizer.
That deal was one of the most lucrative ever for a European biotech company. On top of an unusually high share of the profits, estimated by analysts at 40 percent, Celltech was also entitled to milestone payments of up to $280 million. The deal fell through when Pfizer tried, unsuccessfully, to renegotiate terms.
FLAT NEAR-TERM OUTLOOK
Celltech, one of Europe's few profitable biotech firms, reiterated that it was likely to report broadly stagnant sales and profits during 2004-2006, in the run-up to CDP 870's launch.
It currently sells a portfolio of largely acquired medicines, such as Tussionex for coughs and colds, to fund biotech research.
Overall 2003 revenue, checked by a weak dollar, rose seven percent to 353.3 million pounds ($636.9 million), including product sales of 259.2 million pounds. The balance of Celltech's revenue comes from royalties on its technology, which are expected to decline. This, however, should be offset by growth in marketed products in the next couple of years, Celltech said... |
