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Business

Partnering With Biotechs

Novartis and Merck collaborations with specialist drug discovery firms reflect quest to fill product pipelines

by Patricia Short
December 10, 2007 | A version of this story appeared in Volume 85, Issue 50

Moroney
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Credit: MorphoSys
Credit: MorphoSys

Two small European firms are the latest biotech specialists to benefit as large pharmaceutical companies seek innovative ways to fill their product pipelines.

In the larger deal, which could be worth more than $1 billion, Munich-based MorphoSys has formed a 10-year alliance with Novartis to develop therapeutic antibodies.

MorphoSys will receive more than $600 million from Novartis over 10 years for R&D funding and technology access, and future royalty payments could add more. The two companies began working together in 2004 to develop MorphoSys' HuCAL human antibody technology. Now, Novartis will accelerate its plan to install the HuCAL technology at its research sites.

Over the lifetime of the agreement, the parties will double their therapeutic antibody discovery programs. During a conference call with securities analysts, MorphoSys CEO Simon Moroney would not elaborate on specific areas of investigation but did say that MorphoSys' own projects, particularly in rheumatoid arthritis, would be unaffected.

Analysts seemed enthusiastic about the deal, which DZ Bank's Patrick Fuchs termed "very elegant financially and strategically."

The alliance is "a transforming deal for MorphoSys," Moroney said, giving his company more resources to power its own corporate development and reduce its reliance on fee-for-service discovery deals.

In the other deal, Addex Pharmaceuticals, a Swiss company specializing in allosteric modulation, which centers on tuning receptor-drug interactions, has entered an exclusive collaboration with Merck & Co. to develop a new class of orally available drugs. Initial projects will focus on Parkinson's disease. Addex will receive $3 million up front and is eligible for up to $106.5 million in research, development, and regulatory milestone payments for the first product developed for multiple indications.

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