Valeant (VRX) Loses European Rights To Psoriasis Candidate

Valeant Pharmaceuticals International, Inc. (NYSE:VRX) announced that its partner AstraZeneca (NYSE:AZN) has amended the company’s license to its pipeline candidate, brodalumab.

As per the amendment, AstraZeneca has decided to terminate Valeant’s rights to develop and commercialize brodalumab in Europe. We note that brodalumab, an IL-17 receptor monoclonal antibody, is currently under regulatory review for the treatment of patients with moderate-to-severe plaque psoriasis.

The companies had inked the agreement in Aug 2015, which granted Valeant an exclusive license to develop and commercialize brodalumab globally, other than Japan and certain other Asian countries.

However, as per the amended agreement, Valeant will continue to hold the license to develop and commercialize brodalumab in the U.S. and the remainder of the territory outside Europe. In lieu of the termination of rights in Europe, AstraZeneca will pay an upfront fee to Valeant, along with certain sales-based milestone payments. Additionally, one of the pre-launch milestones, which would be paid by Valeant to AstraZeneca, has been reduced.

Earlier, in 2016, FDA accepted the Biologics License Application (BLA) brodalumab for review, as submitted by AstraZeneca and Valeant, and assigned a Prescription Drug User Fee Act (PDUFA) action date of Nov 16, 2016. The Dermatologic and Ophthalmic Drugs Advisory Committee is scheduled to review the BLA on July 19.

With the termination of Valeant’s rights, the company will now focus on the approval and commercialization of brodalumab in the U.S. Meanwhile, AstraZeneca has granted LEO Pharma the rights to develop and commercialize brodalumab in Europe.

Given its current state of affairs, it is imperative for Valeant to develop its pipeline. The company has been making headlines of late, for all the wrong reasons like a price hike of specialty drugs, erroneous financial reporting and termination of contracts with Philidor Rx Services. The company also delayed its earnings release due to the review of certain accounting practices. As if the delayed results were not enough, a slash in guidance hints at more troubled conditions ahead. We believe management transition issues, heavy debt levels and persistent organizational distractions will continue to impact the company’s business.

Investors interested in the health care sector may consider stocks like United Therapeutics Corporation (NASDAQ:UTHR) and Eisai Co., Ltd. (OTC:ESALY) .