Valeant bets the odds on AZ's psoriasis med in $100M-plus development deal

Valeant ($VRX) has long been working to beef up its presence in the fast-growing dermatology space, and now, it's made its way into contention in the next-gen psoriasis field with a deal for AstraZeneca ($AZN) prospect brodalumab. The question, though, is whether it can get that candidate in the game.

Valeant CEO J. Michael Pearson

AZ partner Amgen ($AMGN) bailed on brodalumab in May after assessing reports of suicidal thoughts in some study patients. But now, Valeant's ready to take control. It will fork over $100 million up front for exclusive development and commercialization rights to the experimental therapy, plus prelaunch milestone payments of up to $170 million.

If brodalumab wins approval, Valeant will be on the hook for sales-related milestone payments of up to $175 million following launch, and it will share any profits with AstraZeneca. Valeant says it's planning regulatory submissions in both the U.S. and Europe for this year's fourth quarter.

After that, it'll be up to Valeant to make good on the drug's commercial potential; at one point, industry-watchers believed brodalumab could hit blockbuster heights. But Amgen, for its part, "came to believe that labeling requirements likely would limit the appropriate patient population" for brodalumab, R&D chief Sean Harper said in announcing that his company would abandon the drug.

And that's not to mention the raft of heavyweight competitors that Valeant would have to face down in the marketplace. Novartis' ($NVS) Cosentyx, approved in January, is ready and waiting, and the Swiss pharma giant is already working to build on its plaque psoriasis nod with regulatory submissions in ankylosing spondylitis and psoriatic arthritis. Also coming up Big Pharma's psoriasis pipeline are ixekizumab from Eli Lilly ($LLY), MK-3222 from Merck ($MRK) and guselkumab from Johnson & Johnson ($JNJ), to name a few.

Meanwhile, Valeant's dermatology products have come up big for the Quebec company so far this year, and not just because of its acquisition strategy. Last quarter, the company buoyed new skincare launches Onexton and Luzu with DTC marketing efforts--new territory for the serial buyer, which has been working to shrug off attacks on its M&A-focused business model that cropped up during its failed pursuit of Allergan ($AGN) last year.

And brodalumab isn't the only drug Valeant has bought after another drugmaker pulled out or failed. This month, the Canadian drugmaker snapped up Sprout Pharmaceuticals and its controversial female libido drug Addyi for $1 billion, years after Boehringer Ingelheim gave up on the med. And early this year, Valeant bought Dendreon's assets out of bankruptcy, including the lagging prostate cancer treatment Provenge.

- read Valeant's release