Novartis Inks $832.5M Deal with Kyorin for Preclinical Hives Prospect

Novartis has further strengthened its preclinical pipeline and continued its search for a Xolair successor by securing a licensing agreement with Japanese biotech Kyorin Pharmaceutical Co., Ltd. The deal, potentially worth up to $832.5 million, centers around KRP-M223, a preclinical mast cell-targeting candidate for chronic spontaneous urticaria (CSU).

Deal Structure and Financial Terms

Under the terms of the agreement, Novartis will pay Kyorin $55 million upfront for exclusive global rights to develop, manufacture, and commercialize KRP-M223. The deal includes potential milestone payments of up to $777.5 million, bringing the total value to $832.5 million if all milestones are met.

Kyorin has retained the option to commercialize the asset in Japan, while Novartis holds its own option to co-promote the drug with the biotech in the country. This structure allows for flexibility in the Japanese market while giving Novartis global control over the asset.

Strategic Implications for Novartis

The acquisition of KRP-M223 aligns with Novartis' ongoing efforts to maintain its strong position in the CSU market. The company's current flagship product, Xolair (omalizumab), developed in partnership with Roche, has been a significant player in the chronic hives space since its FDA approval for CSU in 2014. In 2024, Xolair generated approximately $1.6 billion in sales.

However, with Xolair's compound patent already expired and its formulation patent set to expire in November 2025, Novartis has been actively seeking potential successors. The company's interest in KRP-M223 demonstrates its commitment to maintaining a strong presence in the CSU market beyond Xolair's patent expiration.

Chronic Spontaneous Urticaria: A Significant Market Opportunity

Chronic spontaneous urticaria, also known as chronic hives, is characterized by recurring swollen, itchy blotches that persist for longer than six weeks. The condition can significantly impact patients' quality of life, often leading to sleep deprivation, anxiety, and depression.

The substantial market opportunity in CSU treatment has attracted other major players in the pharmaceutical industry. Sanofi and Regeneron have been working to challenge Xolair's dominance with their drug Dupixent (dupilumab). Additionally, smaller biotechs like Third Harmonic Bio are developing potential competitors, with plans to advance their KIT inhibitor into a phase 2 trial by mid-2025.