Galen signs deals for skin ailment drugs

Northern Ireland pharmaceutical firm Galen has added to its presence in the dermatology market after signing agreements relating to two drugs for the treatment of psoriasis.

Galen, which specialises in women's health, urology and skincare, has entered into a co-promotion agreement with Bristol-Myers Squibb for Dovonex in the US.

Dovonex, which had net sales of $126 million (€115.5 million) in the US in 2002, is used in the treatment of moderate to mild psoriasis and is currently marketed by Bristol-Myers Squibb under licence from Danish pharmaceutical group, Leo Pharma.

Galen has also entered into a development agreement with Leo Pharma to develop another psoriasis drug, Dovobet, for the US market in what analysts believe may yet prove to be the more important part of the deal.

Dovobet, a combination product, is already sold in Europe and Galen believes it is likely to reach the US market in two to three years' time.

Leo Pharma intends to shortly submit an investigational new drug application for Dovobet to the US Food and Drug Administration (FDA). Under the terms of the agreement, Galen will pay Leo Pharma $47 million if Dovobet eventually receives full FDA approval. Of this figure, $40 million is payable on approval.

Regarding Dovonex, Galen will be compensated by Bristol-Myers Squibb based on an agreed formula relating to sales of the drug. Galen has also entered an option agreement allowing it to purchase Bristol-Myers Squibb's rights to the drugs on any of three dates, August 1st, 2003, 2004 or 2005. The terms of purchase have been pre-agreed but will be kept confidential.

"This is an excellent opportunity for Galen to enhance our pipeline in dermatology," Galen chief executive, Mr Roger Boissonneault, said. "The co-promotion agreement will allow us to participate in the Dovonex franchise in the US while the option agreement allows us to acquire the product in the future."

Analysts welcomed the deals, saying they were lower risk than recent acquisitions and allowed Galen to leverage its sales force.

However, the fact that the financial terms of the Bristol Myers-Squibb transaction have not been disclosed make it difficult to assess the financial impact. In London, Galen shares closed 5.5 per cent higher at 432.50 pence while they added 5+ per cent in Dublin to €6.25.