Allergan Pharmaceuticals International, a wholly owned subsidiary of Ireland-based Allergan, has entered a definitive agreement with British biotech firm Heptares to license exclusive global rights to a broad portfolio of novel subtype-selective muscarinic receptor agonists in development for the treatment of major neurological disorders, including Alzheimer's disease. The agreement covers first-in-class selective small molecule agonists targeting muscarinic M1 and M4 receptors in the brain.

The clinical-stage drug design specialist spun out of the MRC Laboratory of Molecular Biology in Cambridge, UK, in 2007 after receiving venture capital funding from MVM Life Science Partners was snapped up for $400 last year by Japan’s Sosei group.

Leveraging its proprietary StaR technology and structure-based drug design (SBDD) capabilities, Heptares is building a pipeline of new medicines believed to have potential to transform the treatment of Alzheimer’s disease, schizophrenia, cancer, migraine, metabolic disease, and other indications.

Under the terms of the deal, Heptares will receive an upfront payment of $125 million and will be eligible for contingent milestone payments of up to around $665 million associated with the successful Phase 1, 2 and 3 clinical development and launch of the first three licensed compounds for multiple indications. It also may receive about $2.5 billion associated with achieving certain annual sales thresholds in the years following launch.

Additionally, the biotech firm will be eligible to receive up to double-digit tiered royalties on net sales of all products resulting from the partnership. Allergan is also committing up to $50 million to a joint R&D program aimed at advancing multiple candidates through Phase 2 clinical studies.

Allergan will be responsible for the development of licensed compounds on initiation of Phase 2b studies and for subsequent manufacturing and commercialization of the products. Shinichi Tamura, chairman and CEO of Sosei, called the pact “an important milestone in our journey to become a global biopharmaceutical company.”  He said it also “further endorses our strategic decision to acquire Heptares in February last year, placing its GPCR-directed drug discovery and development capabilities at the heart of our business.”

The transaction is subject to customary clearances under the US Hart-Scott-Rodino Antitrust Improvements Act. This requires a filing with the US Federal Trade Commission and Department of Justice, which must determine that the transaction will not adversely affect US commerce under antitrust law.