GlaxoSmithKline RNA Pact (NYSE:GSK)

On early Monday morning GlaxoSmithKline has decided to pay upfront fees and milestone payments to the Dutch biotech company Prosensa. GSK has committed to pay the upfront fees of US$ 680 million to Prosensa for the package of four RNA programs aimed at DMD or also known as Duchenne Muscular Dystrophy. GlaxoSmithKline is presently one of the oldest pharmaceuticals company and leader in research-based healthcare and pharmaceuticals. On the other hand, Prosensa is a biotech company which is dedicated to the commercialization of products for the healthcare market base on RNA-based therapeutics. Both the companies have entered the collaboration for the commercialization and development of RNA-based therapeutics in the healthcare sector.

As per the agreement terms, GSK would acquire an exclusive worldwide license for the development and commercialization of Prosensa’s lead compound PRO051, which is meant to treat DMD by skipping exon 51 of the dystrophin gene. For the collaboration, Prosensa will initially receive US$ 25 million as upfront fees and around US$ 655 million as milestone payments provided that GSK can go all the way and commercialize all the four RNA compounds developed by Prosensa. The developers will also receive good amount of royalties, co-promotion rights, and other commercial rights in certain European countries which will be an added benefit to Prosensa to endorse their RNA compounds and healthcare technology.

On the GSK front, the development of Prosensa’s PRO051 compound will be handled by GSK’s Neurosciences Medicines Development Centre and work in collaboration with Prosensa. Both the healthcare companies have already prepared for the Phase 3 study which will begin in the early months of 2010. GSK will be funding all the cost and expenditure associated with the further clinical study of PRO051. Prosensa CEO Hans Schikan has stated that this alliance with GSK will help them develop PRO051 better and quicker.