GSK and Concert Pharmaceuticals to develop deuterium-modified drugs in deal worth up to $1 billion

GlaxoSmithKline plc will collaborate with Concert Pharmaceuticals, a clinical-stage biotech focused on the application of deuterium chemistry to create novel small molecule drugs, on the development and commercialization of deuterium-modified drugs, the companies announced last week. Including milestone payments, the deal could bring Concert $1 billion for its R&D programs.

Amy Swinderman
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LONDON—GlaxoSmithKline plc will collaborate with Concert Pharmaceuticals, a clinical-stage biotech focused on the application of deuterium chemistry to create novel small molecule drugs, on the development and commercialization of deuterium-modified drugs, the companies announced last week. Including milestone payments, the deal could bring Concert $1 billion for its R&D programs.

The deal includes three of Concert's research and development programs; namely, CTP-518, a protease inhibitor for the treatment of HIV expected to enter Phase I clinical trials in the second half of 2009, a preclinical compound for chronic renal disease, and a third, unspecified research product in Concert's pipeline. Concert will also provide GSK with deuterium-modified versions of three GSK pipeline compounds for GSK to develop.

Under the terms of the agreement, Concert will receive $35 million in upfront payments, including a $16.7 million equity investment by GSK. Concert is eligible to receive milestones and tiered, double-digit royalties based on deuterium-containing products arising from the Concert pipeline programs. In addition, Concert is eligible to receive milestones as well as royalties on the sales of deuterium-containing products arising from the GSK pipeline compounds. Overall, Concert has the potential to receive in excess of $1 billion in total milestone and upfront payments from GSK spread across all programs.

For each Concert pipeline program, Concert will have responsibility for research and development activities through completion of pre-agreed clinical trials. After the completion of such clinical trials for each program, or earlier if it chooses, GSK may elect to obtain an exclusive, worldwide license to product candidates within the program.  At such time, GSK will assume responsibility for development and commercialization.  Concert will retain full rights to further develop and commercialize its product candidates in any program GSK chooses not to license.

With GSK's continued focus on HIV therapies—an effort boosted recently by GSK's partnership with Pfizer on HIV drug development—the agreement fits into the company's goal of accessing "the best science and technology platforms worldwide," said Patrick Vallance, senior vice president of drug discovery at GSK, in a statement.

"We believe Concert's approach to deuterium modification of medicines has broad potential to enhance certain drug properties and result in innovative new medicines," Vallance stated.

Dr. Roger Tung, Concert president and CEO, added that the collaboration is a major step forward in the Lexington, Mass.-based company's strategy to advance a broad pipeline of novel deuterium-modified therapeutics. Since it was founded in 2006, Concert has raised more than $110 million from venture capitalists and institutional investors including Brookside Capital Partners Fund, TVM Capital, Three Arch Partners, Fidelity Investments, Skyline Ventures, Flagship Ventures, Adage Capital Management, Greylock Partners, New Leaf Venture Partners, QVT Fund, Mediphase Venture Partners, Westfield Capital Management, Alexandria Equities LLC and SR One Ltd., GSK's healthcare venture fund.

Following the news, GSK shares fell 1.8 percent to $33.58 in pre-market trading on the New York Stock Exchange. The company's shares also closed 1.1 percent lower at 1,029 pence on the London Stock Exchange.

Some analysts balked at the potentially high price tag of the deal, although most agreed that the initial payments to Concert will temper any eventual milestone payments.

"The deal's milestones total more than $1 billion and are heavily weighted to the three option candidates," wrote In Vivo Blog commentator Chris Morrison. "What's more, the majority of the payments are for clinical and regulatory accomplishment, as opposed to sales-based payments."

Other industry watchdogs discussed the collaboration's unique focus on deuterium. A non-radioactive relative of hydrogen that can be isolated from sea water, deuterium is heavier than hydrogen, forming a stronger chemical bond to a carbon atom of a molecule. This bond obtained by selective deuterium modification may substantially improve the drug's metabolic properties, potentially resulting in better safety, tolerability and/or efficacy of an isotope of hydrogen.

Deuterium has been used extensively in human metabolic and clinical studies. According to Concert, CTP-518 has the potential to be the first HIV protease inhibitor to eliminate the need to co-dose with a boosting agent. Current standard of care is to co-administer HIV protease inhibitors with ritonavir, which is associated with significant complications. CTP-518 replaces certain key hydrogen atoms of atazanavir with deuterium. In preclinical studies, Concert has demonstrated that selective deuterium modification of atazanavir fully retains its antiviral potency but can markedly slow hepatic metabolism, thereby increasing half life and plasma trough levels.

Biotech industry commentator Derek Lowe said Concert and its founders "deserve a lot of credit for giving this idea a fair hearing," but acknowledged some downsides to deuterium.

"No one's taken such a compound all the way through development, and every one of them is going to be different," Lowe wrote in his recent Corante blog. "I can tell you that this is the sort of idea that has surely occurred to many other pharma researchers over the years, who've thought about it a bit and said, 'Nah … someone else must have tried that already.' If this works (and it's already working to the tune of many tens of millions of dollars, at any rate), you can be sure that every other drug company will batten down its patent filings from here on out to make sure that they own the deuterium versions of their new drug candidates. For now, Concert (and their competitors in the deuteration business) have been filing patents on every existing drug they can think of where the technique might show a benefit. My guess, though, is that everything that's usable has been claimed by now."

Amy Swinderman

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