By Brady Huggett

Celltech Group plc reached across the ocean to get what it needed for its orally active cancer treatment compounds - inhibitors of the enzyme KDR kinase - by signing a research and development deal with Johnson & Johnson.

The deal calls for Johnson & Johnson, of New Brunswick, N.J., to support further research at Celltech, to be responsible for all costs associated with worldwide development and commercialization, to deliver an initial payment and pay milestone payments and royalties on future product sales. In return, J&J received worldwide rights to the compounds.

The companies will jointly select lead compounds for clinical development from Celltech's library of inhibitors.

"We've been engaged in the discovery program for quite a little while," said Peter Allen, chief financial officer at Celltech. "And the compounds have been showing some scientific interest, but we don't feel as if we had the expertise to take them to preclinical. So we wanted to work with someone that had the scale-up capabilities and Johnson & Johnson had quite an interest in the kinases."

KDR kinases have a role in regulating the formation of new blood vessels in tumors. The compounds would inhibit vascular bed growth, basically starving tumors and stopping their size increase.

"Tumors require angiogenesis to get larger," said Melanie Lee, research director at Celltech. "The compounds would be anti-angiogenic - if you deprive a tumor of a new blood supply, you stop it from growing."

Lee said the compounds are being investigated for independent use against tumors, and might be used in combination with chemotherapy.

"We just don't know the answer to that yet," she said. "You need to do the experiments in man in order to find out."

As to when those experiments in man may occur, Allen said the deal puts that decision squarely into the hands of J&J.

"The timetable [for development] depends on Johnson & Johnson now," he said. "They will make the decision as to what to take into clinical development or whether to generate further leads." Allen added that Celltech is looking at other indications and the compounds may be useful in the treatment of diabetic retinopathy.

Celltech, of Slough, UK, is one of Europe's largest biopharmaceutical companies and has a profitable pharmaceutical business. It was the combination of Celltech's profitability and Johnson & Johnson's experience that shaped the deal, Allen said.

"We have a significant skill base in therapeutics and in antibody clinical development and in pharmacology," Allen said. "We realized developing this class [of compounds] that we could do a lot of it, but not all of it. We preferred to work with someone on this rather than do it all in house.

"The need for cash flow from milestones wasn't a consideration for us," he added, saying the deal "has quite good royalty rights."

The compounds may have benefits over existing cytotoxic drugs through improved side-effect profiles and reduced drug resistance, and Celltech and Johnson & Johnson are not alone in this area. Lee mentioned both Genentech Inc., of South San Francisco, and AstraZeneca plc, of London, as possible competitors in this field.

"There is competition and that is why it is such an interesting target because companies realize it has potential," Lee said. "It does help validate the target."

Celltech's stock (NYSE:CLL) moved up $1.25 Monday to close at $37.50.