Amgen Inc. AMGN announced that it has entered into a definitive agreement with GlaxoSmithKline plc GSK. Under this agreement, the former will regain all remaining rights to its bone drugs Prolia and Xgeva as well as cancer drug Vectibix in 48 countries including Asia, South America, Europe, Australia and other regions over the world from the latter. The deal includes countries which Amgen perceives as key markets for expansion, such as Brazil, China, Colombia, Hong Kong, Israel, Singapore, South Korea, Taiwan and Thailand.
Notably, Glaxo had owned select regional rights to Prolia and Xgeva since 2009 and to Vectibix since 2010. It had generated about $111 million in combined sales in 2014 by licensing the drugs from Amgen.
Per the deal, Amgen will make milestone payments (amount undisclosed) to Glaxo upon signing and later, on successful transition of the products to itself. Post the switch, Amgen will book all sales for the drugs. While majority of the markets will be shifted back to Amgen over a 12-month period, Glaxo will continue to hold the license for as well as sell and distribute the products for an interim transition period that will vary according to countries.
Amgen expects the deal to be accretive to its adjusted earnings in 2017.
The latest deal with Glaxo is in line with Amgen’s strategy to expand its presence in international markets which have significant commercial potential. It would further provide the company with a platform to introduce new treatments targeting important therapeutic areas such as oncology and bone health.
Currently, both Amgen and Glaxo are Zacks Rank #3 (Hold) stocks. Two better-ranked stocks in the health care sector are Achillion Pharmaceuticals, Inc. ACHN and Mylan N.V. MYL, both sporting a Zacks Rank #1 (Strong Buy).
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