Abbott's Big Gamble | December 19, 2011 Issue - Vol. 89 Issue 51 | Chemical & Engineering News
Volume 89 Issue 51 | p. 9 | News of The Week
Issue Date: December 19, 2011

Abbott's Big Gamble

Firm will pay $400 million for Reata Pharmaceutical's preclinical drug candidates
Department: Business
Keywords: drug discovery, rheumatoid arthritis

Abbott Laboratories says it will pay Reata Pharmaceuticals about $400 million for rights to a range of preclinical antioxidant inflammation modulators (AIMs). The drug candidates are under development as therapies for chronic conditions, including pulmonary and central nervous system disorders and immunological diseases.

The agreement involves one of the largest-ever investments by a drug company in preclinical drug candidates. It extends a deal struck last year in which Abbott paid $450 million for rights to develop and commercialize Reata’s lead AIM drug candidate, bardoxolone methyl. The compound is now in Phase III clinical trials to treat patients with Stage IV chronic kidney disease and type 2 diabetes.

Under the new agreement, Abbott and Reata will equally share costs and profits for most new AIM therapies that go into development. For treatments for rheumatoid arthritis and other autoimmune diseases, Abbott’s share of costs and profits will be 70%. The companies will also collaborate on discovering new molecules that exhibit the same pharmacology as AIM compounds already in Reata’s pipeline.

Wenyong Wang, managing director for merchant banking at the investment firm Burrill & Co., says the deal signals not only Abbott’s confidence in the AIM compounds, but also “how desperate big pharma is for innovation” as big-selling drugs come off patent. Abbott’s rheumatoid arthritis therapy Humira is scheduled to lose patent protection in 2016, and it may soon face a challenge from a new Pfizer drug.

“The message for smaller companies is that if you have a viable product, in a truly innovative sense, big pharma will pay a big premium,” Wang says.

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