BioWorld International Correspondent

Christmas has come early this year for Santaris Pharma A/S. Just one day after closing a new financing round of €20.4 million (US$29.4 million), the Copenhagen, Denmark-based company unveiled a broadly based drug discovery and development alliance with GlaxoSmithKline plc that could be worth more than $700 million in up-front, milestone and equity payments.

London-based GSK is buying into Santaris's Locked Nucleic Acid (LNA) synthetic oligonucleotide chemistry, specifically into its potential to combat viral pathogens. The deal involves a total of five programs, four of which will be new initiatives. The fifth is an option on an ongoing program in hepatitis C virus (HCV) infection. The drug candidate in question, SPC3649, binds the liver-specific microRNA-122 (miR-122), which appears to be essential to HCV pathogenesis. It is expected to enter the clinic next year.

GSK would pay Santaris $5 million up front and additional milestones of up to $122 million if it decides to avail of the SPC3649 option. For each of the four novel programs, Santaris will receive an up-front payment of $3 million, and it could receive research and clinical development milestones totaling $140 million should drugs in the targeted indications reach the market.

GSK is making a $5 million equity investment in Santaris. The company also would receive high single-digit to double-digit royalties on sales of drugs that reach the market.

Santaris will be responsible for research and initial clinical development. GSK will have an option to obtain exclusive worldwide rights after the completion of Phase IIa clinical studies in each of the programs.

"They're not paying for our scientists, but they are paying very big option fees on the back of positive Phase II data," Santaris CEO Keith McCullagh told BioWorld International. Moreover, the milestones available include payments for in vitro and in vivo preclinical work, as well as progress in clinical development. The company will be able to work profitably during each stage of the individual programs, which will be undertaken sequentially, he said.

A lot of the early work will be done in silico, using viral genome sequence information. The amount of compounds Santaris will need to generate and screen will be minimal.

"What you need is good, accurate in vitro screens," McCullagh said. "Starting on the first of January we would expect to be in animal models by the end of the year."

The viral targets in question have not been disclosed - and not all of them have been finalized. "They have identified the first two of them, but they don't want to disclose them because of competitive reasons," he said.

The deal broadens the range of Santaris, which up to now has focused primarily on oncology and on metabolic disease. It also provides big pharma validation of the LNA platform, which some have tended to dismiss as being "old-fashioned" antisense technology, in the wake of the hype associated with small interfering RNA (siRNA) technologies, McCullagh noted. "It's taken them a while to realize that the LNA chemistry transforms the DNA antisense agents into an RNA analogue, high-affinity, single-stranded drug that is as potent as the best siRNAs," he said.

"What we're saying to people is 'stay single' when you're talking about RNA inhibition," he added. "Double-stranded RNAs are too big to get into cells."

LNA was discovered simultaneously, but independently, by Jesper Wengel at the University of Copenhagen (now at the University of Southern Denmark in Odense) and Takeshi Imanishi at Osaka University in Japan. Santaris has all rights to LNA-based pharmaceutical development, while its former parent company, Exiqon A/S, of Vedbaek, Denmark, has rights to diagnostic applications.

Santaris already has one other drug development partner on board. Last year, Bridgewater, N.J.-based Enzon Pharmaceuticals Inc., entered an oncology drug development pact worth up to $200 million in up-front fees and milestone payments. The lead compound in the multidrug program, SPC2968, an antagonist to hypoxia inducible factor-1alpha, has entered clinical development.