ChemGenex signs new deal with German Merck

Melbourne and California-based ChemGenex Pharmaceuticals (ASX:CXS, Nasdaq:CXSP) has signed a new three-year alliance agreement with industry partner Merck KGaA, of Germany, to provide preclinical support in the fields of diabetes, insulin resistance and complications.

Under the terms of the agreement, which runs through to the end of 2008, ChemGenex will receive a total retainer fee of AUD$1 million, with potential additional payments depending on the amount and type of preclinical support provided.

The strategic alliance was first established in 1998 and follows the successful completion of three research contracts in target discovery. "This new agreement is a strong endorsement by Merck of the value they see in ChemGenex' diabetes expertise and of our strong competitive position in this field," said ChemGenex CEO Greg Collier.

"We are very familiar with ChemGenex's animal model and leading edge technological expertise and want to maintain access to these capabilities for preclinical development of a number of interesting potential small molecule therapeutics," said Dr Inge Lues, Merck KGaA's executive vice-president of preclinical R&D.

ChemGenex formed a strategic alliance with UK biopharmaceutical Vernalis in 2004 to discover and validate novel targets in the fields of depression and anxiety.

In June 2005 ChemGenex formed an international alliance with Geneva-based Stragen Pharma to accelerate the clinical development of ChemGenex's lead anti-cancer therapeutic, Ceflatonin, which is currently in phase II/III clinical trials in Europe and the US, treating chronic myeloid leukemia (CML) patients who are resistant to Novartis' drug Gleevec. These trials are expected to be completed in the last quarter of 2006.