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After a year of layoffs and restructuring, Valeant Pharma scores big with a collaboration deal worth up to $670 million.
After a pretty long rough patch, Valeant Pharmaceuticals has received some good news. Last week the company announced that it signed a collaboration deal with GlaxoSmithKline to partner on Valeant's epilepsy drug retigabine.
The treatment features a novel mechanism of action and is targeted toward the refractory market—patients who require multiple epilepsy treatments. Retigabine saw positive results in Phase III clinical trials, sparking interest in GSK.
"It's another tool that can be added to GSK's arsenal of epilepsy drugs," said Laurie Little, vice president of investor relations at Valeant. "More importantly, it's not just another follow-on product."
GSK will pay Valeant $125 million in cash upfront, with additional milestone payments and royalties for worldwide sales. Valeant will co-commercialize the drug, and share up to 50 percent of net profits in the United States, Canada, Australia, New Zealand, and Puerto Rico, and earn a 20 percent royalty on worldwide sales.
A Challenging Year
Valeant has been struggling since at least 2005. At the time, the company was doing well with royalty payments from Schering-Plough on the anti-viral ribavirin, but sales on other products generated a loss. Then-CEO Tim Tyson slashed the work force from 12,000 to 3,700, and discontinued a third of its 600 products. This past May, the Aliso Viejo, CA-based specialty drug manufacturer announced that it would cut its work force in half to even out its expense/revenue ratio. It laid off 130 workers in the US and Mexico, and shed another 1,250 jobs after selling its European subsidiaries to Meda AB for nearly $400 million a few weeks back.
"A lot of things have been happening to the company over the past few months—some more painful than others—but the idea is that we got to the point where we were so widespread, trying to be everywhere that we weren't doing very well anywhere," Little told Pharm Exec on Wednesday.
"There's not that many drugs coming out of Phase III with good efficacy like Retigabine, and we want to do the most that we can to maximize the potential of the treatment—not just to get it out there," Little said.
In the epilepsy market, Valeant has the rectal gel Diastat for emergency seizures in children, and is working on an intranasal version to broaden the appeal for adults. Valeant is not planning on partnering with all of its upcoming drugs, and is considering acquiring drugs and collaborating with smaller pharma companies.
"A lot of companies would try to keep all the profits and do it all themselves, but sometimes they can't," Little said. "This deal gives us the ability to share the risks, and it gives us cash to do other things."