Washington Editor

Theravance Inc. stands to make up to $545 million in a deal with GlaxoSmithKline plc to pool their respective long-acting beta 2 agonists to develop treatments for respiratory diseases such as asthma and chronic obstructive pulmonary disease.

The agreement is the first major deal for Theravance, a privately held South San Francisco-based company founded in 1996.

David Brinkley, the company's senior vice president for commercial development, described Theravance to BioWorld Today as a drug discovery and exploratory development company with "extremely sophisticated medicinal chemistry and pharmacology capabilities" that can be used to discover lead compounds to be partnered for late-stage development and commercialization.

Terms of the deal require GSK, of London, to develop and commercialize one or more of the pooled compounds as a single agent and/or in combination medicines using its technology.

"This collaboration will help us to maintain our leadership role in the respiratory field," Tachi Yamada, GSK's chairman, research and development, said in a prepared statement. "We are eager to develop the compounds pooled by Theravance and ourselves with the objective of providing the next generation of respiratory medicines."

Two of the pooled compounds already are in Phase I development. Brinkley would not say from which company the compounds originated.

And rather than discussing specifics related to the financial terms agreed upon, Brinkley referred to a press statement that said Theravance will receive an initial $50 million payment, consisting of payment for an issuance of preferred stock and an up-front fee. Theravance also will receive clinical, regulatory and commercial milestone payments.

Based on the continued successful development and commercialization of its compounds in the pool as single agents and/or in combination medicines, payments could range up to $495 million, of which $150 million is attributable to the compounds reaching certain sales thresholds, the statement said.

GSK will have exclusive worldwide manufacturing and commercialization rights.

Theravance also would receive double-digit royalties on products containing any compound in the pool, regardless of the compound's origin.

Brinkley said Theravance has more than $150 million in cash, including GSK's $50 million payment. Since its inception, the company has raised $370 million in five rounds of financing, he said.

The company has 230 employees, including 150 to 170 who work in science.

"We have kept a very low profile and prefer to let our data speak for itself," Brinkley said. "I think the thing that most attracted GSK was the quality of the data on the compounds that we have produced in our discovery efforts. We have taken the technological insight that we have, multivalency, and by applying that to validated targets, we are in the process of making next-generation medicines that have significant improvements in safety, efficacy, convenience and tolerability."

Using multivalency technology, Theravance researchers can increase a molecule's binding affinity and selectivity, enhancing properties that cause efficacy and safety. "So by improving the interaction between a drug and the body, we can make increases in potency, or which part of the body it targets. That way you can reduce side effects or the length of time it stays in the body," Brinkley said. "That's the case in the collaboration we've just signed. We are looking at medicines that can be dosed once a day instead of twice a day."

Meanwhile, Brinkley said Theravance has an injectable antibiotic for serious infections caused by bacteria that are resistant to other drugs, nearly ready to enter Phase II trials.