• Joint research and development programme on Hsp90, a target implicated in a number of different cancers
• Vernalis to receive a $1.5 million signature fee
• Novartis to fund future research and development
• Novartis to make an investment in new Vernalis shares of approximately £5 million
• Collaboration validates Vernalis’ structure-based drug design capability

Reading, UK and Cambridge, Mass., USA, August 9th 2004 – Vernalis plc (LSE:VER, Nasdaq: VNLS) today announces that the Novartis Institutes for BioMedical Research, Inc., (Novartis) has exercised its option to license exclusive worldwide rights to Vernalis’ lead oncology research programme on Hsp90. Today’s announcement is the positive conclusion of the option agreement the companies signed 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.

 

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 will make an equity investment of approximately £5 million ($9 million) through the subscription for 7,106,344 new Vernalis ordinary shares at 70.18p per share, representing almost 4.6% percent of Vernalis’ enlarged issued share capital. The methodology for calculating the subscription price was established at the time of entering the option agreement in December 2003.

 

In the event that two product candidates from the collaboration reach the market, total payments to Vernalis from Novartis could exceed $75 million, excluding royalties.

 

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.

 

Simon Sturge, chief executive officer of Vernalis said, “I am delighted to be announcing a third major deal for Vernalis in only six weeks.  Novartis is a world leader in oncology and an optimal partner to help maximise the opportunity for developing Hsp90 inhibitors as potential cancer treatments.  This collaboration further validates Vernalis’ research capability and provides additional funding.”

 

Notes to editors : Background information on Hsp90

 

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.

 

----ends----

 

Enquiries:

 

Vernalis plc

Simon Sturge, Chief Executive Officer

Tony Weir, Chief Financial Officer

+44 (0)118 977 3133

 

Brunswick Group

Wendel Carson

+44 (0)20 7404 5959

 

 

Safe Harbour statement: this news release may contain forward-looking statements that reflect the Company’s current expectations regarding future events. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including the success of the Company’s research strategies, the applicability of the discoveries made therein, the successful and timely completion of clinical studies, the uncertainties related to the regulatory process, the successful integration of completed mergers and acquisitions and achievement of expected synergies from such transactions, and the ability of the Company to identify and consummate suitable strategic and business combination transactions.

 

 

About Vernalis

Vernalis plc was established in September 2003 following the merger of British Biotech plc and Vernalis Group plc. Operating from state-of-the-art R&D facilities at its headquarters in Reading (UK) and in Cambridge (UK), the company is equipped to undertake the full development of compounds from discovery through to product registration. Its first product – frovatriptan – is approved and marketed in the US and Europe , and is backed by an innovative research and development portfolio. Vernalis is pursuing a growth strategy based upon successful pipeline development and further consolidation within the biotechnology sector.