Teva buys rights to prostate cancer drug

Teva Pharmaceutical Industries is preparing for the evil day that a rival company begins selling a copycat version of its blockbuster drug Copaxone, by expanding its portfolio of brand drugs. The Israeli company yesterday agreed to pay the U.S. company OncoGenex Pharmaceuticals up to $560 billion for an equity stake and mainly co-development rights to OGX-011, a drug being developed to treat progressive metastatic prostate cancer and non-small cell lung cancer as well.

Teva will give OncoGenex an initial payment of $60 million for OGX-011, which OncoGenex co-developed with Isis Pharmaceuticals.

The initial payment includes a $10 million equity investment in OncoGenex common stock at $37.38 a share.

Also, OncoGenex will be eligible to receive up to $370 million in additional cash payments upon achievement of various regulatory and sales target milestones.

OncoGenex will receive tiered royalties on sales of the product with the royalty percentage ranging from the mid-teens to the mid-twenties, and retains an option to co-promote OGX-011 in the United States and Canada.

Teva is the world's biggest provider of generic drugs, a status it secured with the 2003 acquisition of Sicor, the 2005 acquisition of Ivax Corp and the 2008 acquisition of Barr Laboratories. However, its brand drug Copaxone, used to treat relapsing-remitting multiple sclerosis, is responsible for about 20% of its sales. In 2008, for instance, Teva's total revenues amounted to $11.1 billion. Worldwide sales of Copaxone amounted to $2.3 billion. Teva has long argued that it is nigh impossible to make generic Copaxone because of the sheer complexity of the molecule, but rival companies including Mylan Labs have been seeking U.S. Food and Drug Administration approval of versions nonetheless.