Biocompatibles in big AstraZeneca deal

Development agreement | Licensing agreement

In a deal that could be worth over €300 million, UK company Biocompatibles has announced product development and option-to-license agreements with AstraZeneca for a proprietary GLP (glucagon-like peptide) analogue invented and developed by Biocompatibles’ CellMed subsidiary. The initial target indications are Type 2 diabetes and obesity.

The product development agreement provides for a programme of pre-clinical, Phase I and Phase IIa activities that will be managed by CellMed. Payment by AstraZeneca of a schedule of option fees, totalling up to €8.8 million, is designed to cover the cost of the product development work.

AstraZeneca gains an exclusive option to license the relevant patents for exploitation in the field of diabetes and obesity, at any time during the course of the product development programme. On the exercise of the option, AstraZeneca would pay a licence fee of €25 million and would assume financial and management responsibility for the programme. Further milestones of €37.5 million would be payable prior to first sale of product.

After launch, royalties in the single to mid-teens digit range would apply, the rate depending on the level of sales achieved. In addition there is provision for sales-related milestones up to a maximum value of €256 million.

Biocompatibles was founded in 1984 by Professor Dennis Chapman on the basis of his work at the Royal Free Hospital School of Medicine in London (now part of the UCL Medical School). The company floated on the London Stock Exchange in 1999.

Crispin Simon Chief Executive Biocompatibles said, “A product development agreement with AstraZeneca in the field of diabetes and obesity is a significant event for Biocompatibles and further evidence of the value being created by CellMed. This programme is now a high strategic and operational priority. We are delighted to adopt the licensing model with a company of AstraZeneca’s drug development and marketing capabilities.”

Gunnar Olsson, VP & Head of Cardiovascular and Gastrointestinal Therapy Area, Global Drug Development, Astra Zeneca, said, “This innovative molecule with differentiated properties has the potential to become an important therapy in both diabetes and obesity. We believe that the Biocompatibles compound has potential advantages to other GLP-1 medicines, a clear patent position and some very interesting properties.”