GSK Option Deal With Concert Is Just Like Lots of Other GSK Option Deals, Only Heavier

a hydrogen isotope AND a Canadian death-metal band? you betcha.

It seemed a few weeks back when Concert Pharmaceuticals announced they'd been granted patents by the USPTO on deuterated versions of rimonabant and mosapride that one kind of validation could quickly lead to another.

As Derek Lowe has pointed out, the molecules crossed a major threshhold: if one could be patented, why not the rest? Today the other shoe dropped: GSK has entered the fray with another one of its many option-alliances, and Concert's technology has passed yet another test.

GSK paid the biotech $35 million up-front (which includes $16.7 million for equity priced consistent with the price of the shares sold in its $37 million 2008 Series C) in exchange for options on three Concert projects: CTP-518 (a deuterated version of BMS's atazanavir HIV protease inhibitor that is scheduled to enter Phase I this year), a preclinical compound in chronic kidney disease, and a third undetermined compound. Like most of GSK's option-deals, the Big Pharma can choose to opt into a program at clinical proof-of-concept (generally post Phase IIa but in the case of '518 post Phase I).

Concert will also create deuterated versions of three additional molecules for GSK, and hand those off after lead optimization. The deal's milestones total more than $1 billion and are heavily weighted to the three option candidates, says Concert's chief business officer Steve Bernitz. What's more the majority of the payments are for clinical and regulatory accomplishment, as opposed to sales-based payments. Concert will get a double digit royalty on compounds from its pipeline and an undisclosed royalty on deuterium-containing molecules from GSK's pipeline.

Replacing hydrogen atoms with deuterium atoms (hydrogen atoms saddled with a neutron) essentially creates new NCEs, getting Concert around existing composition-of-matter IP. But "it does not change the physical characteristics of a drug," president and CEO Roger Tung, PhD, told us today. After leaving Vertex where he led that company's drug discovery efforts (and co-invented the successful HIV PIs Lexiva and Agenerase) Tung co-founded Concert with Richard Aldrich and Christoph Westphal in 2006, and has largely kept things under wraps until recently (though we were sufficiently intrigued back then to include them in our inaugural A-List of that year's top Series A financings). "So we're retaining the way a drug interacts with receptors and the pharmacology of a drug, with respect to its positive effects and selectivity profile, is unchanged."

But, says Tung, deuterium forms stronger bonds with other atoms in comparison with hydrogen, because of its greater mass. And that increase in bond strength can change the rate of a drug's metabolism and the relative ratio of its metabolites, which in turn can affect the safety and tolerability and even efficacy of certain drugs, he says.

All this remains to be seen in the clinic, but if it works out, Concert's deuteration approach (also embraced by biotechs like Auspex and Protia) seems to be the ultimate in life-cycle management. In an interview both Tung and Bernitz kept returning to the low-risk nature of the company's approach. "Generally we've been able to move from concept to the clinic in about two years," says Bernitz. And Concert doesn't take on "the risk of new biology" that many pharmaceutical companies are now embracing. "That lower risk-approach to drug discovery and development is recognized in this deal," given the substantial terms Concert has garnered for its preclinical programs, he says.

It seems logical that Concert's window for patenting deuterated versions of existing molecules is finite, perhaps now even closed since industry should be wise to deuterated drugs by now, though Tung doesn't see it that way. "Industry will take this up in the coming years, but we believe we have the poll position now and are the leaders in the use of deuterium."

And beyond deuterated versions of marketed drugs there are "tens of thousands" of compounds available that showed promise but for one reason or another did not become marketed therapies, he says. "I think we're going to be very busy for quite some time."

And so for now, what about Bristol-Myers? The company's Reyataz (atazanavir) remains on-patent and according to Tung will likely still be on-patent by the time '518 should be hitting the market. Though Tung says Concert talked to BMS prior to the GSK deal it's unclear whether BMS was in the running for the compound. For Concert, finding a partner with strength in HIV was important.

A bonus? "The deal validates that [the originator] isn't the only company we can work with" when dealing deuterated compounds, says Bernitz.