The two-part deal has quite a complicated structure and incorporates both an alliance part and a part concerning Galapagos' own internal R&D programmes to develop rheumatoid arthritis (RA) drugs. The bottom line though, as Galapagos CEO Onno van der Stolpe told DrugResearcher.com, is that the company estimates it will receive a total of €1bn for around five or six first-in-class drugs. J&J already markets a blockbuster RA drug, called Remicade (infliximab), which is a monoclonal antibody (MAb) against tumour necrosis factor alpha (TNF-alpha). Although the drug generates around $4bn (€2.8bn) in annual sales, according to Van der Stolpe, it has its problems.
"Remicade is an injection, which patients don't like, and only 30 per cent of them respond to the therapy," he said. Galapagos is only going to develop small-molecule drugs that can be administered orally.
"That is currently the Holy Grail - to find and oral alternative to TNF-alpha therapy," he added. But the Galapagos scientists won't be going after TNF-alpha as a target. Instead, the strategy at the company is to use adenovirus vectors to deliver short hairpin RNAs (shRNAs) into cells. These then produce small interfering RNA (siRNA), which can be used to suppress or 'knockout' the activity of specific disease-relevant genes, and their associated protein products. The resultant cellular assay is used to find the role of proteins in a disease, such as rheumatoid arthritis.
Once a new protein target has been identified, it is then validated by a number of means, including secondary assays. Thanks to this technique, Galapagos then has the luxury of only selecting entirely novel protein targets for drug discovery and they can fully patent protect each one for a given disease. This means any resultant drugs will not only be intrinsically first-in-class but might also be the only drug that targets a given protein for a given disease - so called 'sole-in-class'.
It is this methodology and potential to have a target all to itself that has attracted J&J, said van der Stolpe. He went on to say that his company has already identified, validated and patent protected numerous RA targets, including unnamed kinases, proteases, GCPRs and ion-channels. The partnership with J&J is divided into two parts. In the first, Galapagos will develop drugs against 12 of these targets. Once the drug passes a Phase II proof of concept trial, the pharma giant then has the option to license it fully and for each one, Galapagos could receive €73m in milestones, plus royalties.
"However, of course we expect some attrition in this process. For example, we might get six leads and four into the clinic and so we estimate we could receive around €150m to €200m for this part of the deal," said van der Stolpe in an interview. The second part of the deal revolves around Galapagos expanding its own internal RA programme to develop small molecule drugs against seven targets. This also includes its most advanced drug candidate to date, GT418 which is in preclinical testing and is expected to enter Phase I trials next year. If this or any other internal programme is licensed by J&J - again after proof of concept - Galapagos will receive €60m, a figure van der Stolpe believes in the highest ever for this sort of deal. Up until that point, Galapagos will only receive "relatively modest" license option fees every year.
Galapagos is then eligible to receive up to a staggering €776m in development, regulatory and sales milestones if more than one drug is approved in several indications. Of course, given the number of RA drugs the two companies will be developing, the total payments could theoretically run into many billions of euros, but van der Stolpe said Galapagos has only figured for one successful drug from this second part of the deal, giving the publicised total value of €1bn. As a result of the deal, Galapagos has increased its 2007 financial guidance to €60-64m from €54-58m.
The new deal dwarves the recently expanded alliance that Galapagos has with GlaxoSmithKline - worth around €180m - although as Van der Stolpe pointed out, that deal was concerned with much earlier stage research.