Orexo, a Sweden-based pharmaceutical company, has signed a research and development alliance and license agreement with Ortho-McNeil-Janssen Pharmaceuticals and Janssen Pharmaceutica (collectively OMJ), for developing new drugs to treat respiratory diseases.

The licenses granted to OMJ include worldwide licenses to Orexo's ongoing OX-CLI and OX-ESI programs focusing on discovering and developing new small-molecule treatments for asthma, chronic obstructive pulmonary disease, and other inflammatory diseases.

In addition, OMJ will add a third internal program focusing on discovering and developing small-molecules against an undisclosed target to the alliance on the same financial terms.

Initially, the agreement will run for three years; however, OMJ has an option to extend the alliance and funding. To Orexo, the alliance will bring a research funding contribution of up to $21.5m over the first three years, including an upfront payment of $10m.

Upon the successful development and commercialization of all three initial alliance programs for multiple indications, Orexo will be entitled to total development milestone payments of up to $564m, plus additional sales milestones for each program.

Commercialized products will also provide royalties. In addition, the agreement grants Orexo an option for rights to co-promote drugs from the programs marketed by OMJ in Nordic and Baltic countries. OMJ will be responsible for all clinical development and commercialization activities, including costs.

Torbjorn Bjerke, president and CEO of Orexo, said: "I am delighted to announce this exciting alliance with OMJ in the area of new drug discovery and development. There are significant medical needs in the fields of respiratory and inflammatory diseases. This agreement adds to the other good alliances we have made and is an important element for Orexo in becoming a profitable pharmaceutical company."