Shares in US drug major Schering-Plough closed up 4.6% at $19.33 on the New York Stock Exchange yesterday, after a bout of frenzied trading was sparked by reports of a new deal for hepatitis C drugs and analyst upgrades.
The company has signed an exclusive collaboration and licensing agreement for the development of PTC Therapeutic’s preclinical hepatitis C virus (HCV) candidates, which are designed to inhibit the production of viral proteins.
"The goal of this alliance is to develop new oral therapies to improve treatment for patients with hepatitis C, one of the most serious and common blood borne infections in the world," noted Catherine Strader, Executive Vice President of Discovery Research at the Schering-Plough Research Institute.
Under the terms of the deal, PTC will be paid an upfront fee of $12 million and will receive as funding for its research efforts under the joint program. In addition, the group could be due milestone and royalty payments if certain development, regulatory and commercial targets are met, leading to potential total payments of over $200 million. In return, S-P gains exclusive worldwide commercialization rights for any approved products.
The candidates should be a welcome addition to S-P’s hepatitis C has portfolio, the marketed end of which has suffered since the demise of Rebetol (ribavirin) to generic competition and with increasing rivalry seen for its newer offering Peg-Intron (peg-interferon alfa 2b). S-P has already been working hard to keep the engine running in this lucrative area, and has an HCV protease inhibitor in Phase II development which it says could eventually become a billion-dollar drug. Buying promising preclinical candidates will add further muscle to its early-stage pipeline.
But it was likely the reports of two investment firm upgrades for the firm that really fuelled investor enthusiasm. Chris Schott, an analyst at Banc America, lifted Schering-Plough to ‘neutral’ from ‘sell,’ and retained his $18 price target, while Goldman Sachs raised its rating to ‘in-line’ from ‘underperform’. Both rises were, in part, due to the continued strong performance of the group’s cholesterol-buster Vytorin (simvastatin and ezetimibe), which is sold with partner Merck & Co and raked in sales of $355 million for the fourth quarter.