BioWorld International Correspondent

Molecular Partners AG is banking an up-front payment of $5 million after entering a drug discovery and development alliance in inflammatory disease with Centocor Research & Development Inc., the research arm of Horsham, Pa.-based Centocor Inc.

Further financial terms were not disclosed, but the deal also involves research funding, milestone payments and royalties on eventual product sales. "The milestone and royalty payments compare to those of recent agreements in the field," Zurich, Switzerland-based Molecular Partners said in a news release. Centocor will hold exclusive global development and commercialization rights on whatever molecules emerge from the program.

The deal involves two undisclosed targets identified by Centocor, whose parent, New Brunswick, N.J.-based Johnson & Johnson Company, is a Series A investor in the Swiss firm, through its venture finance arm Johnson & Johnson Development Corp.

Molecular Partners will generate drug candidates to these targets, based on its proprietary Designed Ankyrin Repeat Protein (DARPin) format, which exploits repeat structures found in ankyrins, ubiquitously expressed intracellular adaptor proteins that play a variety of structural and functional roles. It engineers diversity into the scaffold by altering up to seven amino acid residues per protein.

The resulting DARPins are small, highly stable proteins, which, unlike antibodies, are capable of being manufactured in high yields in bacterial expression systems.

In addition to their apparent technical advantages over antibodies, DARPins - along with other novel formats - are not encumbered by existing patent portfolios. The company, therefore, has complete freedom to operate, chief business officer Patrick Amstutz told BioWorld International. "With antibodies this is always difficult," he said.

The firm, which was founded in 2004, already has two other alliances under way, with Basel, Switzerland-based F. Hoffmann-La Roche Ltd. in a variety of fields and with Berlin-based Bayer Schering Pharma AG in oncology.

The deal with Centocor differs in scale. "From a strategic aspect, it's clearly of a different magnitude," Molecular Partners CEO Christian Zahnd told BioWorld International. "It clearly shows the interest of pharma companies in this type of technology," he said.

The company is talking with several other potential partners, although it has a selective approach to deal-making. "We certainly would have the capability to go for more. The decision to go for more is a strategic one," Zahnd said.

"If it makes a lot of sense to follow up on a particular target with a particular partner, that's the trigger," Amstutz said.

It also is progressing its internal pipeline, and it aims to move its first DARPin into the clinic by the second half of 2009. The company closed CHF18.5 (US$17 million) in its Series A round last August and is not looking for additional financing at present. "At the moment, the company is very well funded, so there is no immediate need to raise more cash," Zahnd said.

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