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AbbVie (ABBV - Analyst Report) recently entered into a collaboration with biopharma company, Receptos Inc., whereby the latter in-licensed RPC4046 from AbbVie.

The Candidate – RPC4046

RPC4045 is a humanized anti-interleukin-13 (IL-13) antibody asset. AbbVie has already conducted a phase I study with RPC4046 – results showed that RPC4046 was well tolerated in healthy people as well as in patients suffering from mild to moderate persistent asthma. Moreover, the results supported the use of RPC4046 in both single dose IV administration and multiple subcutaneous doses.

Terms of the Deal

Under the Development License and Option Agreement, Receptos will conduct a phase II proof-of-concept study with the candidate which is being developed for eosinophilic esophagitis (EoE). Once results from this study are available and following discussions with the FDA, AbbVie has the exclusive option to enter into a worldwide co-development collaboration with Receptos for RPC4046.

Once AbbVie exercises its option, both companies will share costs related to the phase III and future development of the candidate equally.  While Receptos would retain co-promotion and equal profit rights in the US, AbbVie will hold sole commercial rights in ex-US territories. Receptos would be eligible to receive double-digit royalties on net sales outside the US. The companies may also choose to pursue additional indications under the collaboration.

Meanwhile, if AbbVie does not exercise its option, worldwide exclusive commercial license to all indications for RPC4046 would remain with Receptos.

AbbVie currently carries a Zacks Rank #3 (Hold). While we are positive on the company’s strong late-stage pipeline, dividend yield and growth strategy, we remain concerned about AbbVie’s dependence on Humira. We believe the company will continue pursuing licensing deals and collaborations to boost its pipeline.

Large-cap companies that currently look more attractive include Eli Lilly (LLY - Analyst Report) and Novo Nordisk (NVO - Analyst Report). Both companies carry a Zacks Rank #2 (Buy). Meanwhile, companies like QLT Inc. (QLTI - Analyst Report) carry a Zacks Rank #1 (Strong Buy).

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