By Ian Walker and Denise Roland

LONDON-- GlaxoSmithKline PLC is selling its remaining rights to a drug for use in treating autoimmune diseases, including multiple sclerosis, to Novartis AG for up to $1 billion, plus royalties.

Glaxo said on Friday that Novartis will own rights to ofatumumab, as the drug is known, in all indications. The Swiss company will also pay royalties of up to 12% to Glaxo on any future net sales of the drug related to autoimmune indications. Novartis had previously bought the rights to the drug as a cancer treatment, for which it is marketed as Arzerra.

The sale follows the previously agreed $20 billion asset swap between the two pharmaceutical groups, which they completed earlier this year.

The Novartis transaction involved Glaxo trading its oncology franchise for the Swiss company's vaccines business and forming a joint venture on consumer health care, thereby reducing Glaxo's reliance on innovative medicines.

"We continue to focus on progressing our pipeline in core therapy areas including HIV, oncology, vaccines, cardiovascular, immuno-inflammation and respiratory diseases," said GSK Chief Strategy Officer David Redfern.

"We believe Glaxo'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," Mr. Redfern said.

Novartis said the deal would boost its lineup of multiple-sclerosis treatments. "Novartis is pleased to further reinforce our commitment to neuroscience and to add an exciting new treatment to our strong MS portfolio," said David Epstein, head of Novartis Pharmaceuticals.

The Swiss drug maker appears to be lining up ofatumumab as a successor to its $2.5 billion-a-year MS drug, gilenya, which will lose US patent protection as early as 2019. However, its sales potential could be muted since it will compete with a number of other therapies already on the market.

With phase three trial results not expected until 2018, Novartis also lags three years behind a similar drug under development at Roche, according to analysts at Deutsche Bank. As a result, the bank expects ofatumumab to make $300 million in peak year sales for autoimmune disorders.

The deal is expected to close by the end of the year.

Write to Ian Walker at ian.walker@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

August 21, 2015 09:04 ET (13:04 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
GSK (NYSE:GSK)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more GSK Charts.
GSK (NYSE:GSK)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more GSK Charts.