HAMBURG, Germany - The German drug discovery company GPC AG, of Martinsried, and Hoechst Marion Roussel AG, of Frankfurt, entered a $20 million strategic research alliance to discover disease-relevant markers, genes and biochemical pathways in osteoarthritis.

Under the terms of the three-year exclusive alliance GPC will receive an up-front payment, research support and milestone payments, plus royalties. The collaboration may be extended another two years. Earlier this year, GPC had entered a cooperation with HMR in the field of antifungals.

Negotiations about the osteoarthritis research alliance started when HMR was granted support from the German Federal Research Ministry under the program "Diagnosis and therapy by means of molecular medicine" which was launched to promote genomics projects for the development of new methods to prevent, diagnose, and treat common diseases. HMR's project proposal on diagnosis and therapy of osteoarthritis was one of 14 entries chosen from more than 80 applications. Additional partners in the project, which started Jan. 1, are clinicians and scientists from several German universities and research institutions and two smaller biotech companies.

HMR is a major player in the field of arthritis and launched Leflunomide/Arava in the U.S. last year as a treatment for rheumatoid arthritis. The drug received marketing approval in Europe in September.

Frank Douglas, head of drug innovation and approval at HMR, said GPC was chosen as a partner for differential gene expression analysis, target analysis and pathway elucidation because of its "unique and broad platform of genomics technologies." The partnership will involve all of GPC's technology platforms.

Osteoarthritis is a non-inflammatory degenerative disease of cartilage and other joint tissues and the most common rheumatic ailment, affecting more than 200 million people worldwide. Analgesics and physical therapies can reduce the symptoms, but apart from surgical joint replacement no effective treatment for osteoarthritis is available.

"As no disease-relevant genes and markers have been identified so far, neither mechanisms nor subgroups of the disease are known, and a reliable diagnosis is impossible," Seizinger said. "So there is the chance for true pioneering work, and in the end we might have a better understanding of the disease as well as a real blockbuster drug for treatment."

The collaboration intends to identify genes and proteins involved in the disease as a basis for the development of novel mechanism drugs and as prognostic markers.

"GPC retains the right to use targets discovered within the alliance for diagnostic purposes, so that the entry into the market for molecular genetic differentiation is open to us," Seizinger said.

Seizinger views the alliance as a leap forward to become Europe's leading second-generation genomics company. GPC's last financing round, which raised DM 40 million (US$20 million) this summer, and the four pharmaceutical alliances forged within the last 10 months put GPC in a very strong financial position, he said.

"Under the current burn rate our money will do for three to four years. But we want to develop the company even faster than in the two years that passed after our founding, and grow much bigger." The money raised in the next financing round, he added, will be used completely for GPC's internal drug discovery program and the forging of strategic biotech-biotech alliances. "Such alliances are vital for success. In addition, we are definitely thinking about mergers and acquisitions within the next couple of years, perhaps in the U.S."