Allen & Overy (A&O) is acting on what is believed to be Europe’s largest ever biotechnology deal.
A&O has been instructed by biopharmaceutical group and long-term client Celltech. The deal is to license CDP870, an injectable medicine for rheumatoid arthritis, to Pharmacia Corporation.
Celltech will receive an up-front payment of $50m (£34.5m). Then, dependent on the product meeting certain criteria, the company will receive milestone payments up to $230m (£158.5m). Milestone payments are usually around the $100m (£68.9m) mark.
Celltech will also receive a share of profits in the US, Japanese and European markets, where it will co-promote the drug, as well as receiving a royalty sale in other countries.
The drug, which is nearing trial completion, is expected to launch in 2004. It is predicted to achieve annual sales of $1bn (£689m).
Long-term relationship partner Colleen Keck is leading the deal. Although a corporate lawyer, Keck specialises in biotechnology and has a range of pharmaceutical clients.
She originally worked for Celltech when A&O won a beauty parade to advise on its 1992 flotation, ousting CMS Cameron McKenna (then Cameron Markby Hewitt) as its main law firm. A&O then steered Celltech through its £700m merger with Chiroscience, advised by Clifford Chance, to form Europe’s largest biotechnology company.
A&O has a track record in high-end corporate work in the pharmaceuticals and biotechnology arena, with emerging markets work in Eastern Europe and China.
The sector went through a boom in the 1980s but slumped during the 1990s. Keck, however, believes it is seeing a resurgence.
“Historically, biotech was not very well understood,” she says. “It requires a significant investment, and the return is always down the road. It needs patient investors, and people are now seeing the potential for return on their investments.”
US firm Ballard Spahr Andrews & Ingersoll partner Brian Doerner is leading the deal for Pharmacia, which is also using CMS Cameron McKenna as its UK counsel.
A&O is using both its UK and New York offices on the deal, although it used Debevoise & Plimpton for a competition filing. New York-based A&O partner Carl Sheldon is leading the deal in the US.