The new drug, AD 237, targets chronic obstructive pulmonary disease (COPD), a respiratory disease primarily caused by smoking. While Arakis has been developing AD 237, Vectura owns the patent for an inhalation device that delivers drugs more effectively to diseased lungs.
Novartis said the compound is in phase II trials for the treatment of COPD and studies have thus far demonstrated that it is well-tolerated and effective over 24 hours after a single dose. However, even with a successful research and development process, AD 237 would not be expected to reach the market before 2010.
Arakis and Vectura will each receive a $15 million upfront payment. The British firms could then earn up to a further $172.5 million should the drug pass various research and regulatory milestones. The companies would also receive royalties on sales of the drug.
The deal is regarded as a major boost to the British biotech industry and could have significant effects on the two companies involved. Arakis, for example, said that the funding should bring the company closer to a planned initial public offering.
For Novartis, the deal improves a drug pipeline that is already considered to be one of the healthiest in the industry. According to the Basel-based group, the current market for COPD drug therapy is estimated to be worth $4 billion per annum and is predicted to grow to $10 billion by 2010.
“With this agreement, our late stage pipeline now contains two promising bronchodilator drugs, QAB149 and AD 237 for the treatment of COPD,” said Joerg Reinhardt, head of development at Novartis Pharma AG. “Both products have significant therapeutic potential, either as single agents or combination therapies.”
COPD, the world’s fourth largest cause of death, is an irreversible and chronic obstruction of the airways. It is estimated that the disease is prevalent in 4% of the population in the US, Europe and Japan, and that at least one in 15 smokers suffers from it.