NeuroSearch and Janssen Pharmaceutica, a division of the Johnson & Johnson group, have signed an agreement to collaborate on the discovery and development of new medicines to treat central nervous system (CNS) diseases.

NeuroSearch will be responsible for the drug discovery programmes as well as for the early development of the drug candidates. Janssen will then have various options to exercise license rights to the individual compounds.

NeuroSearch CEO Flemming Pedersen said that combined drug discovery expertise and activities would provide an optimal framework for the development and commercialisation of new and better CNS medicines.

“We believe the agreement will significantly boost our pipeline of products, representing a substantial value potential for NeuroSearch,” Flemming said.

On exercise of license options, Janssen will be responsible for and finance all subsequent development and commercialisation activities. NeuroSearch will be entitled to milestone payments of up to €213m plus double-digit royalties on global sales for each product successfully developed and commercialised under the alliance.

NeuroSearch will also receive funding of €32m in the first three years, including an upfront equity investment of €10m and a share put option of €5m from Janssen.

In addition, NeuroSearch will receive milestone payments plus royalties on global sales for each compound successfully commercialised.

The agreement will run for three years with an option for Janssen to extend the alliance.