Through the deal, Novartis has exercised its option to license exclusive worldwide rights to Vernalis' lead oncology research programme on Hsp90, an agreement put in place in December 2003.
The companies will conduct a joint research programme under which Novartis will provide research funding to Vernalis over an initial three-year period. In addition, Novartis is responsible for funding and conducting the preclinical and clinical development of product candidates, and for commercialisation.
Total payments to Vernalis from Novartis under the licence could exceed $75 million, excluding royalties.
Novartis will pay Vernalis a signature fee of $1.5 million and a series of further payments upon achievement of development milestones for each product candidate that Novartis takes into development. Vernalis will also receive royalties on commercial sales of collaboration products. In addition, Novartis has made an equity investment in Vernalis.
This is the third deal in two months that Morrison & Foerster has advised Vernalis on. As with previous representations, the Morrison & Foerster team provided advice on the corporate finance and licensing aspects of the transaction. Life Sciences Partner, Julian Thurston advised on the licence agreement, while Neil Foster, Corporate Partner, Bradley Theobald and Maria Harvey (Corporate Associates) advised Vernalis on the equity subscription and listing.
Neil Foster commented, "We have now closed three back-to-back deals with Vernalis in two months. Each of the deals were large licensing deals and each had a connected corporate finance component. In total, the licensing deals have an expected value of over $600 million over the periods of the licences and immediate corporate finance was raised in the aggregate sum of $65 million. The capability to lead this type of licensing-led corporate finance is one of the reasons Julian Thurston joined the firm in April. These deals require a presence in the U.K. and U.S. and other life science "clusters" and the ability to close large corporate finance deals, while demonstrating true sector specialisation in Life Sciences."
The Vernalis Hsp90 programme is the result of a collaboration established in March 2002 with Cancer Research Technology Ltd (CRT) [formerly Cancer Research Ventures Ltd] and The Institute of Cancer Research, under which Vernalis will pay CRT and The Institute of Cancer Research a proportion of its revenues from the agreement with Novartis.
In cancer, proteins called "oncogenic proteins" are responsible for uncontrolled cell division - a characteristic of tumour growth. Hsp90 is a molecular chaperone, essential for the stability and function of several oncogenic proteins. Hsp90 is known to be over expressed in human tumours and the inhibition of Hsp90 results in interference in multiple signalling pathways that mediate cancer growth. Thus, inhibitors of Hsp90 have the potential to inhibit all six hallmark traits of cancer: limitless proliferation, growth signal self-sufficiency, insensitivity to anti-growth signals, apoptosis avoidance, angiogenesis and metastasis.
Vernalis is a new force in U.K. biotechnology, with a strong cash position and significant growth potential, through sales of its marketed product frovatriptan, the successful development and commercialisation of its product pipeline candidates, and through further participation in the consolidation of the biotechnology sector.
Frovatriptan is approved in the U.S. and in 15 European countries for the acute treatment of migraine and is in Phase III trials as a short term oral prophylactic for menstrually-associated migraine, a condition thought to affect as many as half of all women who suffer from migraine. Vernalis has recently signed a North American license agreement and co-promotion option for frovatriptan (Frovaâ„¢ in the U.S.) with Endo Pharmaceuticals.
Vernalis' range of clinical and pre-clinical development programmes include an agreement for the development and commercialisation of its treatment for Parkinson's disease with Biogen Idec and a cancer research collaboration with Novartis. This pipeline is supplied by research programmes exploiting Vernalis' distinctive structure based drug discovery and CNS biology capabilities, and also investigating the potential of a variety of novel molecules and targets in the fields of oncology and neurology. Vernalis is listed on the London Stock Exchange and has ADRs listed on NASDAQ.