(AGN) Allergan-Molecular Extend Contracts

Allergan Inc. (AGN) and Molecular Partners AG recently announced the expansion of their existing partnership with two separate agreements for the discovery, development and commercialization of their proprietary candidate, DARPin (MP0260).  DARPin is being developed for treating patients suffering from serious ophthalmic diseases.

As per the terms of the agreements, Molecular Partners is entitled to a combined upfront payment of $62.5 million. Additionally, the company is eligible to receive success-based payments of up to $1.4 billion for development, regulatory and sales milestones and tiered royalties.

The first exclusive license agreement focuses on the development and commercialization of a potent dual anti-VEGF-A/PDGF-B DARPin and corresponding backups for treating patients suffering from age-related macular degeneration (AMD) and related ailments. As per the license agreement, both the companies will join forces for developing DARPin until human proof of concept.

The second agreement between the partners is a discovery alliance for designing and developing DARPin against selected targets, which causes serious eye diseases. At the time of research Allergan will have the right to exercise three options for exclusively licensing a collaboration compound focusing on ophthalmology.

Allergan will shell out an option exercise fee to Molecular Partners upon implementation of each option.  The company will also be accountable for all downstream development, manufacturing, and commercialization activities.

Earlier, in May 2011, Allergan entered into a licensing agreement with Molecular Partners AG for the development and commercialization of MP0112 (phase II proprietary therapeutic DARPin), evaluated for the treatment of retinal diseases.

We note that the ophthalmology market includes big players such as Merck & Co. Inc. (MRK) and Regeneron Pharmaceuticals Inc. (REGN) among others.

Our Recommendation

We currently have a Neutral recommendation on Allergan. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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