Alantos Pharmaceuticals, a privately held biopharmaceutical company based on the discovery and development of small molecule drugs with a focus on type II diabetes and osteoarthritis/inflammation, has formed a collaboration with Servier, the leading French independent pharmaceutical company, surrounding its lead compound ALS 2-0426, an orally active, small molecule inhibitor of Dipeptidyl Peptidase IV (DPP-IV), being developed for the treatment of type II diabetes.

In preclinical studies, ALS 2-0426 has shown significant advantages in efficacy and safety compared with other DPP-IV inhibitors in development. The compound is presently in Phase 1 clinical studies.

Under the terms of the agreement, Servier acquired the exclusive rights to develop and commercialize ALS 2-0426 worldwide except for the US Alantos will continue to own all rights within the US. Servier and Alantos will closely work together on a common joint worldwide development plan through the end of Phase 2. Alantos will receive upfront and potential milestone payments of approximately $75 million plus double digit royalties. Servier will pay for all development costs through Phase 2 and then will assume the costs related to further development of the compound outside of the US.

"We are excited to be working with Servier, one of the leading players in the field of antidiabetic therapeutics," said Keith Dionne, Ph.D., chief executive officer of Alantos. "Servier's commitment to innovative R&D, their extensive development capabilities and their proven commercialization in 140 countries make Servier the ideal partner for ALS 2-0426."

"This is a significant step in the development of Alantos" said Frank Douglas, M.D. Ph.D., chairman of the board of directors of Alantos. "We are impressed with and have the highest regard for both the scientific quality and business abilities of Servier and look forward to a mutually beneficial and very successful collaboration."

"We are impressed with the quality of Alantos' DPP-IV program and look forward to jointly developing this molecule, which we believe has a superior profile in a very promising field," said Laurent Perret, M.D. Ph.D, President of Research and Development of Servier. DPP-IV inactivates glucagon-like peptide-1 (GLP-1), an important mediator of blood glucose levels following meals. DPP-IV inhibitors have been clinically shown to provide long term improvement of glucose control without the risk of hypoglycaemia, and to improve the function of pancreatic beta cells, the cells responsible for the production of insulin. DPP-IV inhibitors represent a novel approach to the treatment of type II diabetes.

Currently, there are an estimated 200 million people world-wide suffering from diabetes; 90 per cent which have adult onset, or type II diabetes. In type II diabetes, either the pancreas does not produce sufficient insulin or the body fails to respond properly to insulin. The global market for pharmaceutical treatment is estimated at $11 billion and is expected to grow by more than 50 per cent by the end of the decade.