Roche has signed a drug discovery deal with PTC Therapeutics which could net the New Jersey, USA-based firm in the region of $1 billion.

Under the terms of the agreement, the companies will develop orally bioavailable small molecules using PTC’s GEMS technology, focusing initially on four central nervous system disease targets. Cashwise, Roche will make an upfront payment of $12 million and fund PTC’s research efforts.

The latter is eligible to receive additional payments of as much as $239 million per target if certain R&D, regulatory and sales milestones are reached, plus double-digit royalties. Roche has the option to add four targets to the agreement across therapeutic areas “for additional cash payments”.

Christer Nordstedt, head of CNS discovery at Roche, said the “demonstrated productivity” of the GEMS technology platform “makes this an attractive collaboration". It has been employed in drug discovery programmes in oncology, infectious diseases, cardiovascular diseases and neuromuscular disorders and the most advanced compound identified through the technology is PTC299, an anti-angiogenesis drug, is currently in Phase II studies in patients with metastatic breast cancer and multiple tumours.

He added that “this novel and highly innovative technology will enable Roche to address important disease mechanisms that were intractable with conventional approaches”, noting that this may have a “profound impact on the treatment and management of several CNS disorders”,

PCT already has a number of collaborations in place with some big pharma partners, notably Pfizer (a GEMS deal) Schering-Plough (hepatitis C) and Genzyme Corp. The latter deal involves ataluren, which is in a clinical trial for patients with nonsense mutation Duchenne and Becker muscular dystrophy.

PCT also announced that another partner, Celgene Corp, has exercised its option to collaborate on advancing an oncology target addressed through the application of GEMS. In September 2007, Celgene made a $20 million equity investment in PTC.