Regeneron Pharmaceuticals, Inc. REGN and Teva Pharmaceutical Industries Ltd. TEVA announced a global agreement for the development and commercialization of the former’s experimental nerve growth factor (NGF) antibody, fasinumab.

Fasinumab is in phase III development for the treatment of osteoarthritis pain and in phase II development for the treatment of chronic low back pain.

Terms of the Deal

The deal with Teva will see Regeneron receiving an upfront payment of $250 million along with development and regulatory milestone payments, plus additional payments based on net sales. Both companies have agreed to share equally in the ongoing research and development costs of about $1 billion, and the global commercial value of fasinumab.

Under the deal, Regeneron will be responsible for the global development and commercialization of fasinumab in the U.S. Also, both companies will share U.S. commercialization efforts by using sales teams and marketing expertise from both companies, thereby splitting the profit equally.

Further, Teva will be responsible for the candidate’s development and commercialization outside the U.S., in countries covered by the agreement, and pay Regeneron a purchase price which allows both companies to retain approximately equal shares of fasinumab’s global commercial value over the course of time.

We remind investors that Regeneron has granted Mitsubishi Tanabe Pharma the exclusive development and commercial rights to fasinumab in Japan, Korea and nine other Asian countries, under a collaboration agreement that was entered into Sep 2015.

Per the companies’ press release, an estimated 30 million people suffer from osteoarthritis and a similar number with chronic low back pain in the U.S. alone, with both populations expected to grow in the low-single digit percentages annually. Current analgesic therapies including opioids and non-steroidal anti-inflammatory drugs (NSAIDs) pose toxicity and tolerability challenges, especially opioids, which carry risks of abuse and misuse.



Considering that NGF antibody holds the potential to provide an alternative treatment option for pain, and address limitations of NSAIDs and opioid therapies, we are positive on the latest agreement. We note that both Regeneron and Teva are looking to bring new drugs to the market. Particularly, addition of fasinumab will expand Teva’s growing pipeline of pain candidates.

Note that NGF is a protein that plays a significant role in the regulation of pain signaling. Successful development of anti-NGF treatments has been challenging and quite a few companies have faced setbacks in earlier efforts, given the safety concerns associated with such classes of treatments. A successfully developed product could bring in significant sales, given the commercial potential of this class of treatments.

Regeneron is a Zacks Rank #2 (Buy) stock, while Teva carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are ANI Pharmaceuticals, Inc. ANIP and Anika Therapeutics Inc. ANIK. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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