GlaxoSmithKline Grabs HuMax-CD20, Genmab's Promising New Cancer Drug

GlaxoSmithKline plc will boost its oncology drug roster by developing and selling HuMax-CD20, a new blood-cancer and rheumatoid arthritis drug discovered by Danish biotech company Genmab AS. The agreement, according to which Glaxo will pay $357 million for a 10.1% stake in Genmab as well as a $102 million licensing fee, is the company's third deal in eleven days. The size of the deal surprised analysts and may make Genmab profitable as early as next year. HuMax-CD20 is now in Phase III clinical trials for chronic lymphocytic leukemia and non-Hodgkin's lymphoma and Phase II trials for rheumatoid arthritis. If it reaches the market, the drug will compete with Roche Holdings' Rituxan, which is sold by Genentech. The drug's target market is estimated at $5 billion.
• Sources: Wall Street Journal, TheStreet.com, MarketWatch, Bloomberg
• Related commentary: Eye On GlaxoSmithKline, Genentech, Biogen, Elan and PML Disease, Biogen Idec & Genentech Down on Rituxan Related Deaths, Walgreen Co. and Genentech: Two Ways to Play the Drug Sector
• Potentially impacted stocks and ETFs: GlaxoSmithKline plc (GSK) Competitors: Genentech Inc. (DNA), Biogen (BIIB) ETFs: Europe 2001 HOLDRs (EKH), BLDRS Europe 100 ADR Index (ADRU), iShares MSCI EAFE Growth Index (EFG), WisdomTree DIEFA High-Yielding Equity (DTH)

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