MorphoSys AG and Galapagos NV announced the launch of a long term co-development alliance aimed at discovering and developing antibody therapies based on novel modes of action in bone and joint disease, including rheumatoid arthritis, osteoporosis and osteoarthritis.

The alliance spans all activities from target discovery through to completion of proof of concept clinical trials of novel therapeutic antibodies. Both companies will contribute their core technologies and expertise to the alliance. Galapagos will provide antibody targets implicated in bone and joint disease in addition to its adenoviral target discovery platform to discover further targets for antibody development. MorphoSys will contribute its HuCAL antibody technologies to generate fully human antibodies directed against these targets. The initial goal is to further validate the targets through disease-specific in vitro and in vivo testing of the antibodies. After successful validation, the alliance will select antibody programs for pre-clinical and clinical development. Following proof of concept in human clinical trials, programs will be partnered for subsequent development, approval and marketing.

Under the terms of the agreement, Galapagos and MorphoSys will share the research and development costs, as well as all future revenues equally. Decisions will be made by a Joint Steering Committee comprising members of both companies. An initial set of three targets implicated in bone and joint disease has been selected for the collaboration, and Galapagos is already commencing with production of these proteins for the alliance. Generation of antibodies directed against these targets will start in 2009. More targets will be selected using Galapagos' target discovery platform to fuel the alliance in the coming years. If successful, the first antibody programmes based on these novel targets could enter the clinic within four to five years.

"With this alliance, we are adding a biologics strategy to our small molecule drug discovery. Galapagos is the world leader in discovery of novel targets, and this alliance with MorphoSys enables us to explore the potential of proprietary antibody targets. Antibody approaches have proven to be successful in developing new therapies for major diseases, including rheumatoid arthritis. Having both approaches, small molecules and antibodies, to fill our product pipeline in bone and joint disease will further establish Galapagos as the leader in this field," said Onno van de Stolpe, chief executive officer of Galapagos. "With our cash position and revenue streams from both BioFocus DPI and our pharma alliances, we are in a good financial position to enter into this alliance to create value for our shareholders."

"This alliance represents a major step in our efforts to gain access to novel antibody targets for proprietary drug development in disease areas with a high unmet medical need. The partnership with Galapagos combines both the scientific and financial strength of two leading companies in their space," said Dr Simon Moroney, chief executive officer of MorphoSys. "We are excited to combine our broad antibody expertise with Galapagos' target discovery capabilities and disease know-how to form a successful partnership. The access to novel disease-related target molecules from a renowned partner accelerates the expansion of our proprietary antibody pipeline. This alliance also complements our development efforts in the field of inflammation and arthritis including our lead program MOR103."

With this strategic alliance, MorphoSys gains access to a proven target discovery engine as well as to Galapagos' expertise in bone and joint disease, to support its therapeutic antibody pipeline expansion. The three main indications of bone and joint disease - rheumatoid arthritis, osteoporosis and osteoarthritis - all represent very significant market opportunities with several million people affected worldwide and combined sales of drug treatments of more than US$ 15 billion in 2006.

Through the alliance with MorphoSys, Galapagos enters the rapidly growing market for therapeutic antibodies. In 2007, total sales for the 20 antibody drugs on the market amounted to more than US$ 25 billion and antibody sales are forecast to increase to approximately US$ 50 billion in 2013. Fully-human antibodies are recognized as the next generation and the majority of therapeutic antibodies currently in development are humanized or fully-human. The average industry timescale from discovery to pre-clinical development of antibody therapies is only two to three years, considerably shorter than the average six years for small molecules. Antibodies also incur lower attrition rates than small molecules.

Galapagos is a drug discovery company with pre-clinical programmes in bone and joint diseases and bone metastasis.

MorphoSys is a publicly traded biotechnology company focused on the generation of fully human antibodies as a means to discover and develop innovative antibody-based drugs against life-threatening diseases.