(ABT) Abbott Labs Boosts Immunology Pipeline

Abbott Labs (ABT) recently entered into a global agreement with Biotest AG for the development and commercialization of a novel anti-CD4 antibody, BT-061.

The Candidate: BT-061

The deal is focused on the development and commercialization of BT-061 for the treatment of rheumatoid arthritis (RA) and psoriasis. BT-061 is currently being evaluated in phase II studies for RA and psoriasis. Moreover, the candidate’s potential to be used for other immune-related diseases is being evaluated in preclinical studies.

BT-061 could be differentiated from other anti-CD4 antibodies as it does not cause depletion of CD4 positive T-cells which would lead to weakened immune responses.

Terms of the Deal

Per the terms of the agreement, BT-061 will be co-promoted by Abbott Labs and Biotest in the five major European markets: Germany, France, United Kingdom, Italy and Spain. Abbott Labs will have exclusive rights to commercialize BT-061 outside those countries.

In addition to receiving an upfront fee of $85 million, Biotest will be entitled to receive up to $395 million on the achievement of certain development, regulatory, commercial and sales-based milestones. Abbott Labs will also be required to pay royalties to Biotest. While Biotest will be responsible for manufacturing the initial clinical supply of BT-061, both companies will share responsibility for commercial production.

Deal to Boost Abbott Labs’ Immunology Pipeline

With this deal, Abbott Labs is looking to boost its immunology pipeline. The company faced a setback with its immunology pipeline earlier this year when it announced the withdrawal of its marketing applications for its psoriasis candidate, briakinumab (ABT-874). The company withdrew its US biologics license application (BLA) as well as European marketing authorization application (MAA) based on feedback from regulatory authorities.

However, Abbott Labs has a strong presence in the immunology market thanks to its blockbuster drug, Humira. Humira is approved for several indications like moderate-to-severe RA, psoriatic arthritis, ankylosing spondylitis, moderate-to-severeCrohn’s disease, plaque psoriasis, and moderate-to-severe polyarticular juvenile rheumatoid arthritis.

Other players in the immunology market include Amgen/Pfizer’s (AMGN/PFE) Enbrel and Johnson & Johnson/Merck’s (JNJ/MRK) Remicade and Simponi.

Neutral on Abbott Labs

We currently have a Neutral recommendation on Abbott Labs, which is supported by a Zacks #3 Rank (short-term Hold rating). Abbott Labs’ strong business segments and contributions from recent acquisitions should help fortify growth.

While lead product Humira will continue to be a huge growth driver in the next couple of years, we remain concerned about Abbott Labs’ dependence on the product. Moreover, Abbott Labs’ pharma pipeline needs to deliver in order to drive long-term growth.

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