Having just bought UK antibody developer Domantis, GlaxoSmithKline has

again embraced the world of biotechnology through an alliance with Epix

Pharmaceuticals that could be worth over $1 billion to the small US firm.

The companies have announced a worldwide multi-target strategic

collaboration to develop medicines targeting four G-protein coupled

receptors, including EPIX’s novel 5-HT4 partial agonist programme,

PRX-03140, which is in early-stage clinical development for the treatment

of Alzheimer’s disease.

In financial terms, Epix will get an initial payment of $35 million,

including $17.5 million in the form of the purchase of three million

shares by GSK. The deal also calls for payments of up to $1.2 billion

based on the achievement of certain milestones in the GPCR programmes and Epix will also receive tiered double-digit royalties on sales of all

collaboration-developed products.

An interesting clause to the deal is that if GSK exercises the option to

license the Alzheimer’s programme, Epix will retain the right to

co-promote any products that emerge from the pact in the USA.

Unsurprisingly, Epix shares soared to end the day up over 30% at $7.19.

Chief executive Michael Kauffman said that the pact “will provide us with

access to significant capital in the near and long-term” and “the

co-promotion option in this collaboration provides further opportunity for

Epix to build a salesforce in the future."

GSK stock did not shift a great deal, but the company’s moves into

biotechnology in a bid to improve its pipeline is being looked on with

approval by analysts. The fact that Epix has a potential Alzheimer’s drug

makes the alliance even more interesting.