Celera Genomics saw its share price take a small hike yesterday after inking a deal with Schering AG - soon to be merged with Bayer - for its cathepsin S inhibitor programme in autoimmune disease. It comes with potential milestones worth up to $360 million and double-digit royalties, on top of a $5 million upfront payment, half of which will be paid now and the remainder after the rights are transferred, which is forecast to be in the next four months.

Multiple sclerosis is likely to be the first indication. Schering already markets the top-selling MS drug Betaferon/Betaseron (interferon beta-1b), which saw sales jump 23% during the first quarter of the year to 232 million euros, but has been looking to strengthen its portfolio in this area.

Celera's cathepsin S inhibitor - code-named CRA-028129 - entered the clinic in September 2005 and is currently being investigated in a Phase I study in New Zealand. It will join Schering's ongoing study of high-dose interferon beta-1b treatment and the leukaemia therapy Campath (alemtuzumab), which is currently in Phase II development in MS.

Last year, the company was forced to halt dosing in a Phase II study of Campath in MS after a patient died of a serious bleeding disorder. But Schering also reported that Campath had shown excellent efficacy, cutting the relapse rate in patients with MS by 75% compared to the comparator drug, Serono's blockbuster Rebif (interferon beta-1a). Campath is given just once a year, while Rebif is given three times a week.