Recently, GlaxoSmithKline (GSK) and Denmark-based Genmab AS received a conditional marketing authorization for Arzerra (ofatumumab) from the European Commission. The drug, a monoclonal antibody, is indicated for patients with chronic lymphocytic leukemia (CLL), a cancer of the blood and bone marrow. The approval triggered a DKK 87 million (approximately $16 million) milestone payment to Genmab.
 
The conditional approval does not surprise us since in Jan 2010 the European Medicines Agency’s (EMEA) Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion for Arzerra.
 
Arzerra has been approved for cancer patients who were not responding to the currently available treatment options using fludarabine and alemtuzumab. A drug is granted conditional approval to cater to an unmet medical demand. Approval of this kind is renewed annually as the drug requires further studies to ensure its effectiveness.
 
Earlier, in October 2009, Arzerra received accelerated approval from the US Food and Drug Administration (FDA), following which Genmab became eligible to receive a milestone payment of DKK 116 million (approximately $23 million) from GlaxoSmithKline.
 
In a pivotal study, it was observed that 42% of patients with CLL who did not respond to fludarabine and alemtuzumab responded to the treatment with Arzerra. These patients had a median duration of response of 6.5 months.
 
Glaxo has made significant progress with its late-stage pipeline, the main focus areas being biopharmaceuticals, immuno-inflammation, infectious diseases, metabolic pathways, oncology, ophthalmology and respiratory. The company intends to stop pursuing research activity in certain areas including depression and pain and focus on higher growth areas such as neurodegenerative and neuro-inflammatory diseases like Alzheimer’s disease, multiple sclerosis and Parkinson’s disease.
 
 Meanwhile, we believe biopharmaceuticals will play an important role in driving growth going forward. At the end of 2009, about 19% of Glaxo’s pipeline comprised biopharmaceuticals. The company is working on growing its biopharmaceutical pipeline through in-house discovery, the acquisition of Domantis and by in-licensing late-stage products. Glaxo has several clinical research programs underway including nine assets in late-stage development.
 
We have a “Neutral” recommendation for the stock.

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