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UCB (UCBJF) and Japanese pharmaceutical company Astellas Pharma Inc. recently announced a collaboration to jointly develop and commercialize Cimzia (certolizumab pegol) for rheumatoid arthritis (RA) in Japan.

According to the agreement, UCB will manufacture and supply Cimzia to Astellas for commercialization. Astellas will exclusively distribute the drug and also book sales, while both Astellas and UCB will jointly develop and commercialize Cimzia in Japan. Under the agreement, UCB will receive an initial cash payment and is also eligible to receive clinical, regulatory and commercial milestones payments.

We note that earlier UCB had an agreement with Japanese pharma company Otsuka Pharmaceutical Co., Ltd. for the development and promotion of Cimzia in Japan. Last month, the companies mutually decided to focus on the development of therapeutics for central nervous system (CNS) disorders, and thereafter discontinued their collaboration in immunology.

UCB and Astellas have filed Cimzia with the Japanese regulatory authority, seeking approval of the drug for the treatment of RA in patients who have responded insufficiently to current therapies.

Cimzia is currently marketed in the US and Europe for the treatment of adults with moderate-to-severely active RA. The drug is also marketed in the US for reducing signs and symptoms of Crohn's disease (CD).

Our View

We are encouraged by this agreement as recently UCB has changed the terms of a couple of its collaboration agreements – one with Otsuka Pharma (mentioned earlier), and another with Immunomedics, Inc. (IMMU - Snapshot Report). In December last year, UCB returned its buy-in right to Immunomedics for the cancer indication of epratuzumab, 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 currently have a Zacks #3 Rank (short-term Hold rating) on the stock.

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