BioWorld Today Correspondent

LONDON - Astex Therapeutics Ltd. sealed a deal worth a potential $500 million, licensing its fibroblast growth factor receptor (FGFR) inhibitor and agreeing on a drug discovery program around two cancer targets, with Janssen Pharmaceutica NV.

Under the deal with the Johnson & Johnson subsidiary, Astex will receive $37 million in the form of an up-front payment, an equity investment and research funding. The $500 million headline figure will be achieved if one compound from each program makes it to market.

"This is excellent news. We are very excited and very pleased, especially given the current climate in biotech," Harren Jhoti, CEO, told BioWorld Today. In particular, Jhoti is pleased to have done a deal of such value around an early stage program. As yet the FGFR inhibitor program is at the stage of profiling leads. The drug discovery element of the agreement requires Astex to use its fragment-based approach to drug discovery to find hits to two undisclosed cancer targets that are proprietary to Janssen.

"It is an example of getting a very good deal on a fairly early program," Jhoti said. The agreement means the company has sufficient cash for the next two years at the current burn rate.

The agreement is good news also for Newcastle University and Cancer Research Technology, the commercialization arm of the charity Cancer Research UK. As part of the development of the FGFR inhibitors, Astex agreed to a collaboration with the two in 2006 for the development of model cell systems to test FGFR inhibitors, and both are entitled to milestone payments

Cambridge-based Astex had pencilled in an initial public offering for this year, but Jhoti said the state of the markets have ruled against this, or any other form of fundraising. "Given the market, I'm glad we didn't try and go ahead with an IPO. However, we will continue to monitor the markets and move if things improve."

Astex has three products in Phase I development, two of which, an HSP90 inhibitor and an Aurora kinase inhibitor, it wholly owns.

"The philosophy is that we will continue to talk to potential partners. If a deal looks like it is worth doing, we will be confident to do it because we know our engine can replenish the pipeline," Jhoti said. Since 2004, Astex's fragment-based platform has produced one new candidate each year.

"Very few European biotechs can claim to generate one IND per year," Jhoti said.

Under the terms of the deal with Janssen, its R&D arm, Ortho Biotech Research and Development, will be responsible for completing preclinincal and clinical development of the FGFR and other inhibitors, and for commercialization. Astex has retained rights to co-commercialize FGFR products in the U.S.

While FGFR has been recognized as an important cancer target for at least the past five years, Jhoti said it has proved difficult to discover inhibitors that are highly selective. There are some compounds that have shown activity against the receptor tyrosine kinase, but they inhibit vascular endothelial growth factor (VEGF) and platelet-derived growth factor also, causing side effects.

"Up to now, there have been no compounds that are selective for FGFR. This deal highlights our ability to discover and develop highly selective inhibitors and comes back to our leading position in fragment-based discovery," Jhoti said.

FGFR activates pathways, which promote cell growth and epithelial-mesenchyme transition and survival. Overexpression of FGFR has been implicated in a range of tumors. In addition, there is evidence that FGFR has a role in new blood vessel formation, as a means of acquiring resistance to VEGF inhibitors such as Avastin and Sutent.

Despite the market thwarting Astex's well-advertised ambition to float in 2008, Jhoti does not believe the company's shareholders are restless. While not ruling out a trade sale, he said, "The investors continue to believe in us. We have achieved a lot."