Astellas pens pact to discover drugs in X-Chem’s library

Astellas is looking to X-Chem to uncover candidates against hard-to-hit targets

Astellas Pharma has struck a drug discovery deal with X-Chem. The Japanese drugmaker is paying $16 million upfront and committing to up to $100 million per target in milestones for the chance to uncover compounds in X-Chem’s DNA-encoded library that hit hard-to-tackle targets.

The agreement sees Astellas join companies including Johnson & Johnson, Pfizer, Roche and Sanofi on X-Chem’s client list. Astellas, like the rest of the collaborators, was attracted by the potential for X-Chem’s library of 120 billion DNA-encoded compounds to yield candidates that hit tough targets.

X-Chem, a Waltham, MA-based company that spun out of CRO PPD last year, will pocket research funding and option fees—plus the aforementioned upfront and milestone payments—in return for looking for drugs in multiple therapeutic areas. While the deal structure means the financial value of the agreement to X-Chem could fall anywhere on a wide range, the company already sees the relationship as an important milestone in its development.

“This is a transformational deal for X-Chem in terms of its scope and duration,” X-Chem’s O. Prem Das, Ph.D said in a statement. “It is customized to meet Astellas’ needs in generating novel lead structures against new and difficult targets. The transaction includes built-in mechanisms to expand the research scope, and enables increasing involvement and input of Astellas scientists in the DEXTM-based discovery process over time.”

X-Chem spun out of PPD to build out its biotech business model, which differed from the CRO way of working implemented at its then-parent company. The wide-reaching, back-loaded agreement with Astellas is a manifestation of the idea that drove X-Chem to strike out on its own.

The deal makes Astellas the latest company to be lured by the potential of DNA-encoded libraries. Researchers began speculating about using DNA tags to quickly identify compounds in very large libraries in the 1990s. GlaxoSmithKline gained a library in 2007 through the takeover of Praecis Pharmaceuticals—the management team of which went on found X-Chem—and other companies have accessed similar resources through deals with businesses including DiCE Molecules and Nuevolution.

Despite strong interest dating back more than 10 years, the idea is yet to yield any breakthroughs. GSK has run phase 1 trials of one of the fruits of its work with Praecis—epoxide hydrolase inhibitor GSK2256294—but that is a rare example of a candidate that went from a DNA-encoded library into the clinic.