{mosimage}Cambridge based Asterand has out-licensed some off-core technology in a deal that could net the micro-cap company up to $56m (£30.5m) before royalties.

Asterand, which specialises in providing human tissue and other services to pharmaceutical companies, has entered into an exclusive licence agreement with Allergan, Inc based in Irvine, California aimed at developing treatments for eye disease.

The deal sees Allergan obtain the rights to further develop and commercialise a series of compounds discovered and developed by Asterand to treat conditions and diseases of the eye, such as glaucoma. The compounds arise from the R99 development programme initiated by Pharmagene, the Cambridge company with which Asterand merged in 2006.

These selective, small molecule prostaglandin receptor agonists have been shown in preclinical studies to be effective in reducing intra-ocular pressure. Allergan said it plans to further develop a "focused list of lead compounds" and progress these through clinical development. 

Allergan will pay Asterand an upfront technology access fee of $6.25m (£3.4m) and could receive success-based development and sales milestone payments of up to $56.0 million, plus royalties.

This is big news for a company that, even allowing for the substantial recent gains in its share price, is still only worth £11.55m.

Martyn Coombs, CEO at Asterand said: "Clearly this is a very significant financial deal for Asterand. We are happy that Allergan has decided to carry our prostaglandin program forward after evaluating it under an exclusive material transfer agreement. Allergan has the expertise, reputation and resources to potentially turn these compounds into effective treatments for diseases of the eye, especially glaucoma." 

Asterand said it has has several other promising drug discovery programmes tucked away, including further prostaglandin agonists for immuno-inflammatory diseases (COPD and psoriasis) and pre-term labour, and other "interesting compounds" targeted for the treatment of bone disease, cancer, and irritable bowel syndrome. 

Coombs said:"We plan to put increased effort into realising the value of the programmes, including seeking out-licensing opportunities with other pharmaceutical companies.  Licensing these programmes allows for their continued development while we focus on our core business, further advancing drug discovery by being the pre-eminent supplier of human tissue and human tissue based services."

Coombs, previously a senior boss at US giant, Amersham was brought into the company as CEO in March 2007 with a brief of reviving an ailing company.

The half-year results posted yesterday by the company reveal that the new(ish) broom is making considerable headway. Revenues were up 43 per cent to £5.1m, while losses were cut by 94 per cent from £1m to £60k.

Coombs feels that the four new non-exec directors he has brought on board are also making their presence felt: "Our revitalised commercial team is leveraging increasing demand by broadening our relationships with large pharmaceutical and biotech companies in order to become more of an integrated partner in the early stages of the drug discovery process. At the same time, gross margins have improved to 51% (2007: 39%) as a result of our restructuring efforts.

"We believe the group is well on its way to achieving its key objective of sustained revenue growth and profitability. At the moment, the world is facing difficult economic conditions, and possibly recession. We believe that we are recession resistant, and in fact the market drivers for our products and services are increasing."