X-Chem, a privately held biotechnology company applying its innovative drug discovery capabilities to the generation of novel small molecule therapeutics, announced the signing of a broad drug discovery collaboration with Astellas Pharma. The collaboration will enable the discovery of novel lead compounds for complex drug targets of interest to Astellas from X-Chem’s growing collection of DNA-encoded DEXTM libraries containing over 120 billion compounds. This new partnership is X-Chem’s most expansive first-time alliance with a pharmaceutical company, and is aimed at tackling hard-to-drug targets across multiple therapeutic areas at Astellas.

“We are delighted to enter into a long-term relationship with a partner of the caliber of Astellas,” said Rick Wagner, Ph.D., chief executive officer of X-Chem. “Our agreement is structured as a highly collaborative effort that has the potential to both be a leading source of new chemical entities into Astellas’ future portfolio and make a meaningful impact on the treatment of human diseases.”

Under the terms of this multi-year agreement, X-Chem will receive an up-front payment of $16 million. X-Chem is eligible to receive research funding, as well as license and option fees as the drug discovery collaboration proceeds. Additionally, Astellas has the option to license compounds identified through this collaboration, and X-Chem will be entitled to preclinical, developmental and commercial milestone payments on licensed compounds against each target. Milestone payments could amount to over $100 million per target, in addition to royalties based on sales of future products.

“This is a transformational deal for X-Chem in terms of its scope and duration,” said O. Prem Das, Ph.D., executive, Business Development at X-Chem. “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.”