Glaxo Continues Its Dealmaking

Big Pharma companies apparently like making biotech transactions in bunches, and the latest serial dealmaker is GlaxoSmithKline(GSK Quote).

The British drug giant said Tuesday it had signed an agreement with Genmab to license and develop the Danish company's experimental cancer and rheumatoid arthritis drug, the third deal for GlaxoSmithKline in 11 days.

The Genmab agreement, which must be approved by U.S. antitrust regulators, could be worth a whopping $2.1 billion to the Danish drugmaker, excluding sales-based royalties.

The immediate payoff includes a $102 million licensing fee and the purchase of $357 million in Genmab stock. Genmab will issue new shares in a private placement of stock, giving GlaxoSmithKline a 10.1% stake in the company, whose stock is traded on the Copenhagen Stock Exchange. The rest of the money, assuming the Genmab drug reaches the market for multiple uses, would cover milestone payments as well as development and commercialization costs.

The Genmab drug, called HuMax-CD20, has been an eagerly awaited compound, as the Danish company conducts clinical trials for rheumatoid arthritis and two types of cancer -- B-cell chronic lymphocytic leukemia and follicular non-Hodgkins lymphoma.

The clinical testing for these cancer indications has reached the third and final stage before a drug is submitted for regulatory review; a treatment for rheumatoid arthritis, an inflammatory disease, is in phase II testing.