Lexicon Genetics Incorporated and Bristol-Myers Squibb Company announced the formation of a broad alliance for drug discovery, development and commercialization in the neuroscience field. The alliance is designed to accelerate the discovery and development of breakthrough therapies to address significant, unmet medical needs in psychiatry and neurology.

Lexicon will contribute 13 drug discovery programs from its current neuroscience pipeline to the alliance. In addition, the alliance will have exclusive access to future neuroscience discoveries from Lexicon's Genome5000 programme for drug development. In this programme, Lexicon is analyzing 5,000 genes using its proprietary gene knockout technologies and its extensive physiological and behavioural analyses to discover novel drug targets from the human genome. Lexicon and Bristol-Myers Squibb will launch a joint medicinal chemistry and preclinical development effort to discover small molecule drugs addressing the new targets and advance them into clinical development. As drugs resulting from the collaboration enter clinical trials, Bristol-Myers Squibb will have the first option to assume full responsibility for clinical development and commercialization.

Lexicon will receive an upfront payment of $36 million from Bristol-Myers Squibb and a minimum of $30 million in research funding over the initial, three-year term of the agreement. Bristol-Myers Squibb has the option to extend the discovery portion of the alliance for an additional two years in exchange for further committed research funding of up to $50 million. Lexicon will receive additional cash payments for exceeding specified research productivity levels. Lexicon will also receive clinical and regulatory milestone payments for each novel drug target for which Bristol-Myers Squibb develops a drug under the alliance. Lexicon will earn royalties on sales of drugs commercialized by Bristol-Myers Squibb.

Lexicon and Bristol-Myers Squibb will share equally in the costs and resources devoted to joint medicinal chemistry and preclinical development efforts in the alliance. The party with responsibility for the clinical development and commercialization of drugs resulting from the alliance will bear the costs of those efforts.

The alliance combines Lexicon's ability to discover the physiological functions and pharmaceutical utility of genes through its gene knockout technologies with Bristol-Myers Squibb's pre-clinical, clinical and commercial expertise to accelerate the pace of drug discovery in neuroscience. Depression is estimated to affect 19 million people in the United States and currently accounts for over $11 billion of annual pharmaceutical sales. Schizophrenia affects one percent of the world's population -- two million people in the United States alone -- and accounts for over $3 billion in annual drug sales in the United States. Given the aging of the United States population, Alzheimer's disease and other cognitive and neurodegenerative disorders represent a growing medical problem.

"We consider Bristol-Myers Squibb to be the ideal partner for Lexicon's drug discovery efforts in neuroscience," said Arthur T Sands, MD, PhD, president and chief executive officer of Lexicon. "With the success of Abilify (aripiprazole), Bristol-Myers Squibb has a rapidly growing franchise in neuroscience that we believe will set the stage for greater commercial success for products emerging from our alliance. We believe our respective strengths will create a lasting leadership position in the treatment of neurological and psychiatric disorders."

"Lexicon's industrialized program to discover the physiological functions of 5,000 genes will provide our alliance with a strategic advantage in identifying key drug targets from the human genome for neuroscience indications," said James BD Palmer, FRCP, chief scientific officer and president, Pharmaceutical Research Institute, Bristol-Myers Squibb Company. "We believe that our successful track record with Lexicon under previous agreements places Bristol-Myers Squibb in an excellent position to assess the value that Lexicon has established. We look forward to utilizing our combined capabilities to discover the next generation of drugs for neuroscience indications."