BioWorld International Correspondent

LONDON - ProStrakan Group plc sealed a deal with a headline value of $140 million under which Novartis AG will develop antibody treatments for bone-related diseases using a ProStrakan target.

The Galashiels, Scotland-based company will get an up-front sum plus R&D services payments totalling $5.75 million over the initial two-year term of the deal. There are also clinical and development milestones, but the full $140 million will be realized only when there is a marketed product with substantial sales.

"We will test their antibodies as and when needed over the next two years, for which we will be paid $5.75 million. After that, it is structured like a typical deal with milestones along the road as things move through development," said Wilson Totten, CEO.

Wilson said it was up to Basel, Switzerland-based Novartis to decide how many products were developed within the collaboration.

The money will be used for development and market launch of ProStrakan's five later-stage products. "The significant thing is that we are monetizing early stage research to get late-stage [products] through to market," Totten said.

Indeed, as ProStrakan has no in-house expertise in antibodies, it was not in a position to undertake the research itself. The company has retained the rights to use the patented target in small-molecule discovery and development.

The deal has similarities to an earlier collaboration covering treatments for renal diseases with Amgen Inc., of Thousand Oaks, Calif., signed in July. Amgen paid $7 million up front and will pay all future development costs, set at $1.1 million in the first year. That deal has a potential value of $150 million.

ProStrakan announced also that is buying worldwide rights to Tostran, a testosterone gel, and Rectogesic, for treating anal fissures, from Cellegy Pharmaceuticals Inc., of Huntingdon Valley, Pa., for $9 million.

The deal frees ProStrakan from existing milestone and royalty obligations taken on when it got European rights to the two products in 2004. Rectogesic has since been launched in the UK and Tostran in Sweden, and the two will be launched elsewhere in Europe during 2007.

Within the deal, ProStrakan has inherited all existing licensing agreements in countries in Southeast Asia and elsewhere. In the U.S. Rectogesic has approvable status from the FDA subject to the successful completion of a further trial. ProStrakan said it will start the trial as soon as possible and forecasts peak U.S. sales of Rectogesic at $50 million to $70 million annually.

"We are rapidly growing the near-term revenues of the company organically and using the funds generated from our earlier-stage pipeline to grow them further and faster," Totten said.

ProStrakan was formed in 2004 from the merger of Strakan Pharmaceuticals Ltd., a specialty pharmaceutical company, and ProSkelia SAS, of Romainville, near Paris, a spinout from the bone diseases group of Aventis SA. The company raised £40 million (US$75.6 million) when it went public in 2005.

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