By Ransdell Pierson (Reuters) - U.S. drugmaker AbbVie Inc (N:ABBV) and Calico, a new company set up by Google Inc (O:GOOG) to cure diseases of aging, will each invest $250 million to help create Calico research facilities and collaborate on discovery and development of new medicines.
AbbVie and Calico said on Wednesday the initial funding would help Calico use its scientific expertise to create research facilities in the San Francisco Bay area. Each partner could ultimately invest an additional $500 million in the collaboration.
"Calico expects to begin filling critical positions immediately and plans to establish a substantial team of scientists and research staff in the San Francisco Bay area," the companies said in a joint release.
A year ago Google announced it was creating Calico, to be headed by Art Levinson, the former chief executive officer and guiding force behind Genentech, a cancer company considered by many to be the most successful biotechnology company in history. Levinson left after Genentech was bought by Roche Holding AG (VX:ROG).
Calico is run separately from Google, the world's largest Internet search company, and focuses on such issues as life-threatening diseases and problems affecting mental and physical agility due to aging.
Google increasingly is placing itself at the intersection of medical science and technology. It also backs privately held 23andMe, which sells a $99 DNA test that provides customers ancestry-related genetic reports and uninterpreted raw genetic data.
AbbVie said it was the first drugmaker to forge a collaboration with Calico. Under the deal, AbbVie will provide scientific and clinical development support and commercial expertise.
The partners will share costs equally, and profits, if drugs are successfully developed.
Calico will be responsible for discovering drugs and studying them in early-stage trials during the first five years. It will continue for a 10-year period to advance its experimental drugs through Phase 2a studies, small mid-stage trials that establish a likelihood the drugs may work in larger studies.
Under the deal, AbbVie will back Calico's early research and, following completion of Phase 2a studies, will have the option to manage late-stage trials and marketing.
AbbVie was spun off in early 2013 from Abbott Laboratories Inc (N:ABT), and sells Humira, a $13 billion-a-year treatment for rheumatoid arthritis which is the world's top-selling medicine.
Humira accounts for 60 percent of AbbVie sales, and the suburban Chicago company needs new drugs to lessen its heavy reliance on the product. It is developing drugs for arthritis, hepatitis C, cancer, multiple sclerosis and Parkinson's disease.
AbbVie in July agreed to pay $55 billion for Dublin-based Shire Plc (L:SHP), moving it into the lucrative arena of rare diseases, in a deal that will allow it to slash its tax bill by relocating to Britain.
Richard Gonzalez, AbbVie's chief executive, on Wednesday said the Calico deal will further diversify his company. "This collaboration demonstrates our commitment to exploring new areas of medicine."
(Reporting by Ransdell Pierson; Editing by Jeffrey Benkoe, Bernard Orr)