Gilead Sciences and Achillion Pharmaceuticals announced that the companies have signed an exclusive agreement granting Gilead worldwide rights for the research, development and commercialization of certain Achillion compounds for the treatment of infection with the hepatitis C virus (HCV).

In this collaboration, Achillion will continue development of the compounds, according to a mutually agreed upon development plan, through completion of a proof-of-concept clinical study in HCV-infected patients. Following the proof-of-concept study, Gilead will assume full responsibilities and costs associated with development and commercialization for compounds warranting further development.

Under the terms of the agreement, Gilead will pay to Achillion a $5 million upfront license payment and will purchase $5 million of equity. In addition, Gilead will provide partial funding through the completion of the proof-of-concept study. Achillion could also earn milestone payments in excess of $100 million under the agreement, based upon the achievement of certain development, regulatory and commercial goals, and will have the option to participate in US commercialization efforts for any future products arising from this collaboration. Achillion's milestone payments could increase substantially assuming progress is made on multiple related compounds. Gilead will receive exclusive worldwide license rights and will pay Achillion a royalty on net sales of future products arising from the collaboration, release from Gilead Sciences said.

John C. Martin, president and CEO of Gilead Sciences said, "Achillion's drug discovery and development expertise, particularly in identifying unique drug targets with the potential to address drug resistance, makes the company an ideal partner for Gilead. We believe Achillion's compounds work through a novel mechanism, making them excellent potential candidates for HCV combination therapy regimens."