For the last few years, Abbott Labs' (NYSE: ABT ) major flaw has been its dependence on its anti-inflammatory Humira. Like Pfizer (NYSE: PFE ) with Lipitor, the loss of Humira is going to hurt. A lot.
Yesterday's licensing of BT-061 from Biotest could help the future bleeding, though. The drug is in phase 2 trials for rheumatoid arthritis and psoriasis and could potentially be used in other immune-related diseases like Crohn's disease, which Humira also treats.
Abbott is paying $85 million upfront and $395 million in potential milestones for access to BT-061. Biotest retained co-marketing rights in the five largest European markets, but Abbott will have worldwide rights elsewhere. If it's approved, Biotest is owed royalties, but as usual, the levels weren't disclosed.
BT-061 works in a different way than Humira -- it attacks CD4 rather than TNF -- which might make it work better. Only working as well as the current TNF blockers -- Humira, Merck (NYSE: MRK ) and Johnson & Johnson's (NYSE: JNJ ) Remicade, and Pfizer and Amgen's (Nasdaq: AMGN ) Enbrel -- isn't going to cut it. Cheap versions of the biologics are on the horizon, which would make it extremely hard for BT-061 to compete.
The other knock on BT-061 is that it's an antibody, so it'll have to be injected or infused. Pfizer, Rigel Pharmaceuticals (Nasdaq: RIGL ) , and Incyte (Nasdaq: INCY ) are all developing rheumatoid arthritis drugs that can be taken orally. Given patients' general disdain for needles, BT-061 could have a tough marketing road ahead if the oral medications are approved.
Even with the clear challenges, licensing a follow-up compound seems like a good move. It certainly beats Abbott sitting on its hands and waiting for the bleeding to begin.
I picked Abbott as one of 11 incredible dividend stocks. You can see the whole series here or grab a free report highlighting 13 high-yielding stocks you can buy today.
RSS Headlines
Fool UK