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UCB (UCBJF) along with Japanese pharmaceutical company Otsuka Pharmaceutical Co., Ltd. recently announced that they have decided to focus on the development of therapeutics for central nervous system (CNS) disorders, while they would discontinue their collaboration in immunology.

As a result of the aforesaid decision, the companies will end their co-development and co-promotion agreement for Cimzia (certolizumab pegol) in Japan, after a mutually decided period. Cimzia is currently marketed in the US and EU for the treatment of adults with moderately-to-severely active rheumatoid arthritis (RA). The drug is also marketed in the US for reducing signs and symptoms of Crohn's disease (CD).

Following the companies decision to discontinue collaboration for immunology, UCB plans to file for the approval of certolizumab pegol in Japan in the first quarter of 2012 for the treatment of RA.

The companies’ collaboration with regards to Neupro (rotigotine) and Keppra (levetiracetam) remains intact. UCB and Otsuka Pharma have an agreement to co-promote Neupro and Keppra in Japan.

Otsuka Pharma markets Keppra as E Keppra in Japan for the adjunctive treatment of partial onset seizures in adults with epilepsy, which offers many patients a new option of treatment. Further, the company has filed for the approval of Neupro in Japan for the treatment of Parkinson’s disease and restless legs syndrome.

We note that this is the second time in less than a month that UCB has changed the terms of its collaboration agreements. Last month, UCB and Immunomedics, Inc. (IMMU - Snapshot Report) amended their agreement for the worldwide development, marketing and sale of epratuzumab for all autoimmune disease indications. According to the new agreement, UCB returned its buy-in right to Immunomedics for the cancer indication of the candidate, and in return got the flexibility to select a partner to sublicense epratuzumab’s rights for certain territories.

Epratuzumab is currently being evaluated in two late-stage trials, EMBODY1 and EMBODY 2, for the treatment of patients with moderate-to-severe lupus. Initial results from these trials are expected in the first half of 2014.

We would prefer to wait and watch how these developments impact UCB. Thus, we have a Zacks #3 Rank (short-term Hold rating) on the stock.

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