Swiss drug maker Novartis unveiled one of the biggest ever deals in the European biotech sector today, taking on an experimental treatment for smoker's lung from two British firms for up to $375 million.
The two British companies, Vectura and Arakis, said Novartis had agreed to develop and commercialise their AD 237 treatment for chronic obstructive pulmonary disease (COPD), more commonly known as smoker's lung.
Vectura and Arakis will each receive an initial payment of $15 million and could also receive up to $172.5 million each in milestone payments as clinical, regulatory and commercialisation hurdles are passed.
They will also receive an undisclosed level of royalties on sales of the drug.
AD 237 is currently in Phase II clinical trials. Medicines have to pass three stages of trials in humans before being assessed for approval by regulators.
COPD is the world's fourth biggest cause of death, according to Vectura and Arakis. It is an irreversible and chronic obstruction of the airways caused primarily by smoking.
The current market for COPD treatments is estimated to be worth $4 billion a year and is predicted to grow to $10 billion by 2010, the two firms said.
Vectura shares closed at 76 pence on Tuesday, valuing the business at about £82 million .
Novartis shares closed at 56.3 Swiss francs.