GlaxoSmithKline in $680 million deal with Prosensa to fight Duchenne Muscular Dystrophy

UK drug giant GlaxoSmithKline and Prosensa, a Dutch based biopharmaceutical company focusing on RNA modulating therapeutics, entered into an exclusive worldwide collaboration for the development and commercialization of RNA based therapeutics for Duchenne Muscular Dystrophy (DMD), a severely debilitating childhood neuromuscular disease that affects one in 3,500 newborn boys.

The financial terms include a £16 million ($25 million) upfront payment. Furthermore, Prosensa is eligible to receive up to $655 million in milestones payments if all four compounds are successfully developed and is also entitled to double-digit royalties on product sales. Prosensa will retain commercial participatory rights, and has an option to expand its commercial rights in certain European countries on products arising under the collaboration. The scope of the alliance includes four RNA-based compounds intended to treat specific, but different, subpopulations of patients suffering from DMD.

Commenting on the deal, WestLB analyst Simon Mather said: 'This is a move to have a much broader portfolio base. Orphan drugs and specialty pharma [are] attractive because you can charge a higher price and you don't need to do much marketing.'Adding his voice, analyst Jeremy Batstone-Carr of Charles Stanley noted that 'the problem with [GSK's] strategy until now is that they've been furthering the consumer and emerging-market credentials, which tend to be low-margin. So perhaps with this deal, GlaxoSmithKline is cognisant that it has to defend its margins.'

Under the terms of the agreement, GSK will obtain an exclusive worldwide license to develop and commercialize Prosensa's lead compound, PRO051, as a potential treatment for DMD. PRO051, the first molecule with this mechanism of action, acts by skipping exon 51 of the dystrophin gene. Mutations in the dystrophin gene result in the absence of normal dystrophin protein, which is necessary for proper muscle cell function. GSK's Neurosciences Medicines Development Centre will continue to progress the further development of PRO051 in collaboration with Prosensa. GSK will fund all costs associated with the further clinical development of PRO051. In addition, the UK firm has exclusive options to license three more RNA-based compounds targeting additional DMD exons. In these cases, GSK's option rights will be triggered by successful study completion.