Drugmakers Otsuka, Lundbeck form global alliance for five drugs

Japanese drugmaker Otsuka Holdings Co and Danish peer Lundbeck yesterday formed a global alliance to jointly develop and sell up to five psychiatric and neurological drugs, a deal that may give both companies billions of dollars in royalties and milestone payment.

The deal could bring Otsuka, Japan's second largest drugmaker by revenue, up to $1.8 billion in royalties and milestone payments, while Lundbeck will get rights to two compounds, which could give it more than 50 billion Danish crowns ($9.1 billion) when fully developed and marketed.

The agreement covers up to five early and late stage compounds in development. The two late stage compounds are Otsuka's aripiprazole depot formulation and OPC-34712. Otsuka receives the rights to enter into co-development, and eventual  ndco-promotion following approval, of up to three compounds after Phase IIb clinical trials.

The alliance is a sales and cost share agreement. Under the terms of the agreement, Lundbeck will make an upfront payment upon signing of $200 million. Otsuka will in total receive up to approximately $1.4 billion from Lundbeck as upfront payment and development and regulatory milestone payments.

With the addition of sales milestones in connection, Lundbeck will pay up to approximately $1.8 billion to Otsuka. Both companies will share the sales and development and commercialisation costs based on the agreement.

For aripiprazole depot formulation, Lundbeck will receive 50 per cent of net sales in Europe and Canada and 20 per cent of net sales in the US from Otsuka. The cost incurred for the development and promotion will be shared in the same ratio.