VRX Bausch Health Cos

By Denise Roland 

Canada's Valeant Pharmaceuticals International Inc. has struck a deal with AstraZeneca PLC for the rights to sell psoriasis treatment brodalumab after Amgen Inc. dropped its own collaboration with the U.K.-based drug maker over concerns about the drug's side effects.

Valeant said on Tuesday that it will pay AstraZeneca $100 million upfront, with another $170 million in prelaunch milestones and up to $175 million following launch. Valeant and Astra will also share profits on sales of the drug.

Under the deal, Valeant, which already has a large portfolio of dermatology drugs, said it would assume all development costs associated with the regulatory approval for brodalumab. It plans to submit the drug for regulatory approval in the U.S. and EU in the fourth quarter of 2015.

The Canada-based company will hold the exclusive rights to develop and commercialize brodalumab globally, except in Japan and certain other Asian countries where rights are held by Kyowa Hakko Kirin Co. under a prior arrangement with Amgen, which first developed brodalumab.

Amgen pulled out of its own collaboration with AstraZeneca in May. The company cited "events of suicidal ideation and behavior" during clinical trials of brodalumab. The U.S. biotechnology company said these events would lead to restrictive labeling.

At the time, Astra said it would stick with the drug, pointing to positive phase-three trial data.

Astra Chief Executive Pascal Soriot said the new agreement with Valeant would "help to bring brodalumab to patients with psoriasis who need new treatment options through Valeant's expert focus on dermatology."

Brodalumab is "potentially the most efficacious therapy yet for moderate-to-severe plaque psoriasis," said J. Michael Pearson, Valeant Chairman and CEO.

However, analysts have cautioned that brodalumab may struggle to win market share if approved due to concerns that it could cause suicidal ideation.

"Physician feedback suggests brodalumab now has no future, even if there turns out to be no link [with suicidal thoughts], given the importance of safety with these drugs and the number of alternatives available," said Deutsche Bank analysts in a note published Tuesday.

Brodalumab, if approved, will compete directly with Novartis' Cosentyx, which launched earlier this year. Both drugs are antibodies that target a protein known as IL-17, using slightly different mechanisms. Lilly is also developing an IL-17 antibody, called ixekizumab, which it submitted to regulators earlier this year. Neither Cosentyx nor ixekizumab have been associated with suicidal ideation.

According to estimates by Deutsche Bank, the market for psoriasis treatments could grow to $14 billion by 2023, compared with $9 billion in 2014, though it expects brodalumab to generate only "minor sales."

Psoriasis is an autoimmune disease that causes a red, scaly rash and flaky skin. It affects around 7.5 million Americans, with around a quarter of these suffering from the moderate-to-severe form of the disease, according to the National Psoriasis Foundation, a nonprofit organization.

Write to Denise Roland at Denise.Roland@wsj.com

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(END) Dow Jones Newswires

September 01, 2015 09:43 ET (13:43 GMT)

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