Edison Pharmaceuticals has entered into a $4.3bn strategic alliance with Japanese pharmaceutical firm Dainippon Sumitomo Pharma (DSP) to develop new drugs targeting cellular energy metabolism.

Under the terms of the agreement, DSP will gain select development and commercialisation rights in Japan and North America to jointly discover drugs in exchange for $10m upfront and a $40m R&D support payment.

In addition, DSP will fully fund the development of ten new jointly discovered drugs through IND filing and broaden its rights to EPI-589, currently in Phase IB, to include North America.

In return, Edison will be eligible to receive in total between $30m and $105m per indication associated with successful development of EPI-589 in North America; between $10m and $30m per indication in development milestones associated with development of jointly discovered compounds in Japan and North America.

"DSP will gain select development and commercialisation rights in Japan and North America to jointly discover drugs in exchange for $10m upfront and a $40m R&D support payment."

Edison is also eligible to receive up to $3.86bn in commercial milestone payments for jointly discovered compounds and EPI-589 in total; and double-digit royalties on commercial sales.

Under a preferred stock purchase agreement, DSP will also invest $50m in Edison and, upon request of Edison, additional preferred stocks worth about $50m will be purchased during the period between the first and the fifth anniversaries of the initial equity closing.

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In March 2013, the two firms signed a collaboration agreement to primarily focus on the adult central nervous system.

Building on this agreement, the new expanded alliance will now allow DSP to gain access to three jointly discovered compounds and fully fund their development in Japan and North America, while Edison will retain rights to these compounds outside of Japan and North America.

Edison will also have worldwide rights to up to seven jointly discovered compounds, which DSP will fund through IND filing.

DSP also will broaden its rights to EPI-589 to include North America and Edison will retain 100% ownership of its drug EPI-743, and it will continue to direct all research, clinical development, and commercial development outside of Japan.

According to the firms, the R&D programme is directed at the characterisation of the redox control energy system critical to the generation and regulation of cellular energy metabolism.

Both companies will work together under a novel collaborative framework to discover, characterise, and translate drugs into clinical development.

The firms believe that the cellular redox ‘network’ is an untapped reservoir of new drug targets, especially for high energy-consuming organs such as the brain.

Edison received financial advisory services on the transaction from JP Morgan Securities and Barclays, and legal counsel from Morrison & Foerster.