BioWorld International Correspondent

Shrugging off recent disappointments in the clinic, Actelion AG signed what is likely to be one of the landmark licensing deals in European biotechnology in 2006.

It entered a co-development and co-promotion deal with F. Hoffmann-La Roche Ltd. that covers a series of orally available selective agonists of the sphingosine-1-phosphate 1 (S1P1) receptor, which is in development for multiple T-cell driven autoimmune indications and for organ transplant rejection. Actelion is receiving an up-front payment of $75 million and would bank an additional $555 million in milestones should the lead compound, which is undergoing a Phase I trial, gain approval in all targeted indications.

It also would have an option to co-promote the product worldwide, and the companies would have an equal share in the profits. Successful development of additional compounds would trigger further milestone payments from Basel, Switzerland-based Roche. Actelion also would receive undisclosed royalties on sales of all products.

The news pushed the company's share price to a high of CHF134.90 on the Swiss Stock Exchange in Zurich Monday, up CHF10.90 from the previous day's close. It ended the day up more than 4 percent at CHF129.20 (US$103.53)

Although Allschwil, Switzerland-based Actelion has had a research effort in this area since 1999, the deal - both in scale and structure - was unexpected. "Bottom line: a complete surprise," Birgit Kulhoff, analyst at Rahn & Bodmer in Zurich, Switzerland, told BioWorld International. "There must be some data behind that to justify that kind of deal."

"It's a positive surprise," said Tilman Dumrese at Bank Sal. Oppenheim jr. & Cie AG, also in Zurich. "The volume of the deal indicates we are talking about potential new blockbusters."

"The numbers are in line with the potential of the drug," Roland Haefeli, head of investor relations at Actelion, told BioWorld International. "This deal is to make sure we can develop the compound in parallel in multiple indications and then co-promote together."

Actelion had initiated a discovery program based around identifying modulators of S1P1 because of its location in the endothelium, the inner lining of blood vessels that was the focus of the company's early research efforts. One of five G-protein coupled receptors that bind the signal molecule sphingosine-1 phosphate, S1P1 is involved in regulating the trafficking of lymphocytes between the blood and lymphatic system, a process that is required for normal immune surveillance functions.

Basel-based Novartis AG has commenced a Phase III trial in Europe of the S1P agonist, FTY720, in multiple sclerosis, but an increased incidence of macular edema or swelling of the retina in transplant patients who received the compound delayed the start of a U.S. trial.

"We have decided to develop selective S1P1 agonists in order really to avoid most of the side effects of non-selective S1P agonists," Actelion CEO Jean Paul Clozel said on a conference call. "We have to say that this is really a hypothesis. We have in animals some proof that some of the side effects can be avoided, but we clearly need to wait more long term for human studies to know that it really holds true."

The wisdom of administering an immunosuppressive therapy for chronic autoimmune conditions "is a fundamental question," Dumrese said, but Clozel said the pharmacokinetic properties of the Actelion compound have important safety implications. It has a rapid onset but only a transient effect. It is designed for daily dosing, so if symptoms associated with immunosuppression arise, administration of the drug can be stopped and its effects can be quickly reversed.

The company has not yet disclosed which indications it will target first, nor has it released the number of indications that are attached to the $555 million milestone figure. It is finalizing with its auditors how it will book the up-front payment, in order to obey U.S. GAAP requirements.

The company will disclose that information when it releases its second-quarter figures Thursday, Haefeli said.