It's a long shot drug deal for Proteologics

The agreement with GSK will only bring big money if the products are successful.

Drug development biopharmaceutical company Proteologics Ltd. has declared that its strategy is to market its products to other companies after the proof of feasibility stage and before the regulatory approval stage, a phase which requires investment and is fraught with risks.

Signing an agreement at such an early stage with GlaxoSmithKline plc (NYSE; LSE: GSK) to commercialize cancer drugs that will be derived from Proteologics's six drug discovery platforms means that most of the revenue, in the event of a drug being successfully brought to market, will go to the multinational pharmaceutical company.

Yet the ratio of investment to profit for such a young company will still be very impressive. In this case, Proteologics may not even be required to invest any capital at all in development, and it may still earn revenue of tens of millions of dollars, and perhaps even hundreds of millions.

Most drug discovery companies would be happy with a commercial agreement at this stage, but not all of them can find buyers. The two agreements that Proteologics has already signed (the other is a joint drug development program with Teva Pharmaceutical Industries Ltd. (Nasdaq:TEVA; TASE:TEVA) which owns 50% of the company), testify to the fact that promising products can successfully arouse interest even in the earliest stages.

However, these agreements only include a chance of making big money if the products are very successful. A general glance at the drug development sector shows that the likelihood of success of a product, which it is still in the animal trials phase, is one chance in a thousand. Proteologics's products are still some way from even that stage.

Published by Globes [online], Israel business news - www.globes-online.com - on February 23, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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