Galapagos NV's drug discovery programs got a major shot in the arm with a multitarget, potential multimillion-dollar rheumatoid arthritis deal with Johnson & Johnson unit Janssen Pharmaceutica NV.

At its peak, the collaboration could bring Galapagos as much as €1 billion (US$1.43 billion) in up-front payments, license fees and milestones, and could involve as many as 15 to 19 targets.

"It's probably the largest RA research alliance in the world," Galapagos CEO Onno van de Stolpe said during the company's conference call.

It also marks "a very important step" for the company, which has been working for the last couple of years on oral RA drugs, a market that could reach an estimated €4 billion, Van de Stolpe said.

While disease-modifying anti-TNF-alpha (tumor necrosis factor-alpha) drugs such as Remicade (infliximab), developed by Centocor Inc., another J&J division, have changed the landscape of RA treatments, those products are delivered by injection only. An orally available therapy would be a vast improvement for RA.

Other anti-TNF-alpha drugs include Enbrel (etanercept), marketed by Thousand Oaks, Calif.-based Amgen Inc. and Humira (adalimumab) from Abbott Park, Ill.-based Abbott.

Galapagos' RA program is in its early stages, though the company anticipates moving into the clinic with its lead program, based on the kinase target GT418, next year. The company has identified two more programs in the discovery stage, targeting GT146 and GT442, and the Janssen alliance will allow "us to ramp up the effort" and investigate 16 more potential RA targets, said Graham Dixon, senior vice president of drug discovery for the Mechelen, Belgium-based firm.

Terms of the deal call for Galapagos to receive an initial €17 million, including a €15 million up-front cash payment and €2 million milestone payment for the selection of GT146 as part of the companies' alliance. Beyond that, the collaboration itself includes two distinct components, Van de Stolpe said, designed to balance Galapagos' risk and reward potential.

One component is the actual alliance program, which involves up to 12 possible RA targets. Janssen will be responsible for funding all early development work through Phase IIa proof-of-concept studies, at which time the pharma firm will determine whether to license programs for further development and commercialization.

Throughout the development process, Galapagos could receive milestones of up to €68 million to €73 million per target and would be entitled to "up to double-digit royalties" upon any product sales, Van de Stolpe said. While he acknowledged the unlikelihood of all targets yielding viable compounds for development, Galapagos expects that part of the collaboration to start "yielding milestones next year," and allow the firm to be cash-flow-positive at year-end "if we meet all our objectives." It also provides Galapagos with sufficient resources to double its R&D investment.

The collaboration's second component is comprised of Galapagos' RA development. That portion could involve up to seven targets, all of which Galapagos will fund through Phase IIa proof of concept. At that point, Janssen again will have the option to take any programs it chooses into further development and commercialization. Galapagos' GT418 program is included in that part of the deal, and Janssen would pay a license fee of €60 million if it opts to move that program forward. If Janssen opts to license all the programs, total late-stage development milestones to Galapagos could total €430 million. The company also would be eligible for up to €346 million in sales-related milestones, plus escalating double-digit royalties.

Shares of Galapagos, listed on the Brussels Stock Exchange under "GLPG," jumped nearly 17 percent, or €1.14, Wednesday to close at €7.94.