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Novartis to pay up to US$1b for rights to skin drug

Swiss drugmaker focusing on developing innovative prescription medicines

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Novartis is branching out into new drugs to counter the impact of cheaper copycats on older products. The experimental drug, known as MOR106, will join the company's portfolio for skin ailments.

Geneva

NOVARTIS agreed to buy the rights to a skin-disease drug from developers Galapagos and MorphoSys in a deal that could reach US$1 billion.

Chief executive officer Vas Narasimhan is focusing the Swiss drugmaker on developing innovative prescription medicines.

Novartis will pay 95 million euros (S$151 million) upfront and later payments of up to 850 million euros based on the drug reaching certain regulatory, commercial and sales goals, MorphoSys said in a statement on Thursday.

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The payments will be split 50-50 between Mechelen, Belgium-based Galapagos and Planegg, Germany-based MorphoSys.

Mr Narasimhan needs new medicines to counter the impact of cheaper copycats on older products.

The experimental drug known as MOR106 will join a portfolio for skin ailments that includes Cosentyx for psoriasis - on its way to becoming a blockbuster - and Xolair, an asthma drug also prescribed for chronic hives, bolstering Novartis' dermatology business.

Atopic dermatitis, which MOR106 targets, is a common form of eczema that doesn't have many treatments.

MorphoSys raised its 2018 forecasts, with a new sales range that's about triple the old one and a smaller operating loss.

Novartis also agreed to pay royalties to Galapagos and MorphoSys in a range of up to low teens and low 20s as a percentage of sales. BLOOMBERG