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Biocompatibles, AstraZeneca forge diabetes pact
January 2009

FARNHAM, U.K.—Biocompatibles plc announced in late December it signed product development and option-to-license agreements with AstraZeneca for a proprietary GLP-1 analogue invented and developed by Biocompatibles' CellMed subsidiary. The initial target indications are Type 2 diabetes and obesity. Total value of the deal if all milestones are met could exceed €300 million.

"A product development agreement with AstraZeneca in the field of diabetes and obesity is a significant event for Biocompatibles and further evidence of the value being created by CellMed. This program is now a high strategic and operational priority," says Crispin Simon, chief executive of Biocompatibles.

The product development Agreement provides for a program of preclinical, Phase I and Phase IIa activities that will be managed by CellMed. Payment by AstraZeneca of a schedule of option fees, totaling up to €8.8 million, is designed to cover the cost of the product development work. The option-to-license provides AstraZeneca with an exclusive option to license the relevant patents for exploitation in the field of diabetes and obesity, at any time during the course of the product development program. On the exercise of the Option-to-License, AstraZeneca would pay a licence fee of €25 million and would assume financial and management responsibility for the program. Further milestones of €37.5 million would be payable prior to first sale of product.

After launch, royalties in the single to mid-teens digit range would apply, the rate depending on the level of sales achieved. In addition there is provision for sales-related milestones up to a maximum value of €256 million.

The GLP-1 analogue is part of a new family of GLP-1 analogues discovered by CellMed. The GLP-1 class is viewed as an important emerging treatment for diabetes and obesity. CellMed's preclinical data comparing the GLP-1 analogue to native GLP-1 are promising. The patents, which AstraZeneca has the option to license, also protect CellMed's inventions in stroke, which Biocompatibles will remain free to develop and commercialize.

"This innovative molecule with differentiated properties has the potential to become an important therapy in both diabetes and obesity. We believe that the Biocompatibles compound has potential advantages to other GLP-1 medicines, a clear patent position and some very interesting properties," says Gunnar Olsson, VP & head of cardiovascular and gastrointestinal therapy area, Global Drug Development, AstraZeneca.

The completion of the preclinical program and initiation of the first clinical trials is expected in 2010. DDN



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