SGX Pharmaceuticals, Inc. has entered into a license and collaboration agreement with Novartis focused on the development and commercialization of BCR-ABL inhibitors for the treatment of drug resistant Chronic Myelogenous Leukaemia (CML).

Under the terms of the agreement, SGX will receive from Novartis $25 million in upfront payments and the purchase of SGX common stock. Along with success-based milestones, but excluding royalties, total payments to SGX could exceed $515 million, including a minimum of two years of research funding, stated a release.

The success of Gleevec (imatinib), the first targeted therapy in Philadelphia Positive (Ph+CML) proven to inhibit BCR-ABL, has fundamentally changed the treatment of Ph+CML. However, a subset of patients develops resistance to Gleevec or cannot tolerate therapy. For these patients there are currently no other approved treatment options. Drug candidates from SGX's lead series, developed from its FAST (Fragments of Active Structures) proprietary drug discovery platform, have exhibited activity against wild-type and drug resistant BCR-ABL mutants, including the most challenging T315I mutant, added the release.

Mike Grey, president and chief executive officer of SGX Pharmaceuticals said, "With their extensive experience developing and commercializing Gleevec as well as development of the novel investigational compound, nilotinib/AMN107, we believe they are the ideal partner with whom to develop our series of next-generation BCR-ABL inhibitors. This is a tremendous validation of our FAST technology for generation of novel lead molecules for key therapeutic targets."

SGX will be responsible for completing preclinical development of the lead candidate and submitting an Investigational New Drug application with the Food and Drug Administration. SGX will also be responsible for the completion of an initial phase I clinical study, after which time Novartis will be responsible for conducting further clinical development and commercialization of the compound.

In addition to the upfront and milestone payments, SGX will receive royalty payments upon successful commercialization of products developed under the collaboration. SGX retains an option to co-commercialize, in the US, oncology products developed under the agreement. If exercised, the option would enable SGX to reinforce the commercial presence in the North American haematology markets which the company plans to establish with the potential launch of Troxatyl in the second half of 2007, assuming the successful completion of the ongoing Phase II/III clinical trial for the treatment of third-line acute myelogenous leukaemia and regulatory approval of Troxatyl for this initial indication in 2007.

FAST is SGX's proprietary fragment-based drug discovery platform for rapid identification of novel, potent and selective small molecule inhibitors of drug targets. FAST addresses many of the limitations of traditional approaches utilized by large pharmaceutical companies to find lead compounds, making it an attractive technology for targets that have not yielded promising leads from high-throughput screening.