Jubilant Organosys in drug discovery alliance

In its second tie-up in this month, Jubilant Organosys, which does contract research and manufacturing services, has linked up with the UAB Research Foundation, University of Alabama at Birmingham and Southern Research Institute, a non-profit research organisation. The tie-up between the three will attempt to marry the respective academic and profit pursuits of these organisations, co-fund the development process and pave a way for a clear marketing strategy for the products under development.

These three organisations will forge a collaboration that will focus on the therapeutic areas of oncology (cancer), metabolic diseases and infectious diseases. The MoU signed between the three companies provides for selection of targets from a joint pool of candidates, development work done by all three parties, the US entities will use early research data to create jobs and secure federal funding, develop drugs to the pre-clinical or up to Phase-2 clinical trials stage.

At this stage, the joint venture has the option of entering into licensing agreements for co-development with pharmaceutical companies. Milestone payments will be received, from such licensing agreements and when a drug finally enters the market, more milestone payments and royalty sharing will be done.

What purpose does this joint venture serve? The University of Alabama is a publicly funded university. It does basic research to identify targets, usually proteins, that cause the disease, according to Richard B. Marchase, vice president, research and economic development, UAB. The university receives more than $400mn in annual funding and claims to be a rich source in biological targets for drug development. Southern Research is a not-for profit independent contract research organisation, that does basic and applied research in various industries, including the pharmaceutical sector. Both UAB and Southern Research are affiliated to each other, with senior staff from UAB serving on its board.

While the university focuses on basic research, the two contract research organisations work on bringing the molecules to market. By pooling together resources, they will be able to work on a larger base of molecules, sharing the risks and costs. Since the probability of a new drug making it to market is very low, a larger number under development increases the chances of a few making it to market.

Jubilant has partnered with research universities to help in early stage drug research and with pharmaceutical companies to collaborate on research. Recently, it tied up with Duke University for new drugs and also to collaborate on two innovative bio-marker (a characteristic biological property that can be used as a diagnostic tool) studies. The Jubilant stock price has gained about 30% in a month’s time but has not moved up after today’s announcement, and is flat at Rs 310 during trading hours.

In the September 2009 quarter, its sales declined by 1% over the previous corresponding period to Rs 933 crore. While pharmaceutical and life science products and services, which contribute to 70% of sales, grew by 11%, industrial and performance products declined by 21% due to lower fertiliser sales. The company revised its earnings before interest, depreciation, tax and amortisation (EBIDTA) growth projections in 2009-10 to about 45% from 30% earlier. It had signed new contracts for contract manufacturing and research, which are expected to contribute to higher growth.

The press release on the joint venture.

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