Abbott, Biotest To Team Up On Treatment For Arthritis, Psoriasis

Abbott Laboratories (ABT) reached an agreement with Biotest AG (BBTAY, BIO.XE) to develop and commercialize the Germany-based company's treatment for rheumatoid arthritis and psoriasis.

Under the agreement, Abbott will pay an upfront fee of $85 million to Biotest, which specializes in haematology and immunology products. The agreement also includes potential milestone payments of up to $395 million.

The companies will co-promote the treatment in Germany, France, the U.K., Italy and Spain. Abbott will have exclusive rights outside those five markets.

Abbott's diversified business lineup has cushioned it from some problems facing other large drug makers, such as patent expirations and generic competition. It has made a series of acquisitions in recent years to help reduce its dependence for sales growth on the anti-inflammatory drug Humira, which may face heightened competition in coming years.

Biotest's treatment, which aims to improve the body's immune system response to the diseases, is in phase II clinical trials. Preclinical studies are under way to assess potential use in other immune-system related diseases.

"This novel compound will strengthen Abbott's immunology pipeline and we look forward to continuing to build on our expertise in exploring multiple mechanisms and approaches to treat inflammatory diseases," said John Leonard, senior vice president of global research and development at Abbott.

Abbott in April reported a 14% decline in first-quarter earnings on costs associated with acquisitions and employee layoffs, while newly acquired drugs in foreign markets contributed to a 17% increase in revenue.

Abbott shares were up 8 cents at $52.10 in early trading. Biotest's American depositary shares rose 8 cents to $30.56.

-By Tess Stynes, Dow Jones Newswires; 212-416-2481; [e-mail]