Shire (SHPG) recently entered into a worldwide licensing and collaboration agreement with privately-held U.S.-based biotechnology company, ArmaGen.
The agreement is related to commercialization rights for pipeline candidate AGT-182, an experimental enzyme replacement therapy (ERT) which is being developed for the treatment of both the central nervous system (CNS) and somatic manifestations in patients with Hunter syndrome (MPS II).
As per the terms of the agreement, Shire will obtain worldwide commercialization rights for AGT-182 from ArmaGen. We note that the candidate enjoys orphan drug status both in the U.S. and EU.
In exchange, Shire will make payments of approximately $225 million to ArmaGen. This includes an initial upfront payment of $15 million in cash and equity, an additional equity investment, research and development funding, milestones payments along with royalty payments.
Meanwhile, ArmaGen will be responsible for conducting and completing the phase I/II study which is expected to start before 2014 end. Thereafter, Shire will be responsible for further clinical development, including phase III trials, and commercialization upon development.
The collaboration with ArmaGen is expected to strengthen Shire’s rare disease pipeline. We note that Shire already has a drug, Elaprase, which is approved for treating Hunter Syndrome. Shire also has one candidate in its pipeline, SHP-609, which is being developed for the treatment of CNS manifestations associated with Hunter syndrome.
Last week, Shire announced that it has finally agreed to AbbVie’s (ABBV) acquisition proposal. Under the terms of the offer, shareholders of Shire will receive £53.19 for each Shire share (£24.44 in cash and 0.8960 ordinary shares of the merged company for each Shire share held).
Shire currently carries a Zacks Rank #3 (Hold). Investors looking for better-ranked stocks may consider companies like Allergan (AGN) and Pfizer, Inc. (PFE). While Allergan carries a Zacks Rank #1 (Strong Buy), Pfizer is a Zacks Rank #2 stock (Buy).
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