Glaxo buys Genmab stake for €1.59bn

THE world’s second-largest drugmaker, GlaxoSmithKline, agreed to pay as much as $2.1 billion (€1.59bn) for a 10.1% stake in Danish biotechnology company Genmab and rights to one of its cancer and arthritis treatments.

Shares of Genmab rose to their highest price in six years.

Glaxo will pay a fee of €78m now and buy shares valued at about €2.03 billion kroner, the companies said yesterday.

Genmab, based in Copenhagen, could get as much as 12 billion kroner in development fees, milestone payments and equity investments.

“I expected Genmab would announce a partnership deal in the first quarter of 2007, so it’s a little earlier than we had expected and it gives us a nicer milestone payment than we had expected,” analyst Frank Hoerning Andersen of Jyske Bank in Denmark said.

His bank raised its rating on Genmab today to “buy” from “accumulate”.

As patents on their best-selling products expire, London-based Glaxo and rival pharmaceutical companies face investor pressure to bring new medicines to market. On December 8, Glaxo agreed to buy Domantis, which develops antibody-based treatments, for £230 million (€342.86m). The Genmab drug, HuMax-CD20, is in late-stage testing.

The agreement may lead to the British drugmaker buying the rest of the Danish company, Sanford Bernstein analyst Gbola Amusa said yesterday.

Glaxo is trying to build up its portfolio of cancer drugs, which includes Tykerb for breast cancer and the Cervarix cervical cancer vaccine, and buying the rights to HuMax-CD20 appears to be a “good deal,” he said.

“Glaxo is still in need of new sources of growth to quell fears of too high a reliance on product line extensions,” Amusa said in the note. “Genmab (if acquired) fits well with GSK’s growing oncology expertise.”

The agreement doesn’t restrict Glaxo from increasing its stake, Genmab spokeswoman Helle Husted said in a telephone interview. Glaxo isn’t looking beyond the agreement, company spokeswoman Gwenan White said in a telephone interview.

Genmab is discussing licensing other products, especially its HuMax-EGFr human antibody for head and neck cancers, with “numerous parties,” Genmab chief executive Lisa Drakeman said.

She declined to identify potential partners.

Genmab’s HuMax-CD20 uses human antibodies to treat forms of leukemia, lymphoma and arthritis. The product helps the body’s natural defences to attack and kill cells responsible for some types of cancer and autoimmune and inflammatory diseases, the companies said.