In a deal that could net it up to $4.295 billion, Edison Pharmaceuticals said today it entered into in an expanded strategic alliance with Dainippon Sumitomo Pharma (DSP) to bring 10 new compounds targeting the central nervous system in adults into clinical development over the next five years.

More specifically, the R&D program will focus on treating the redox control energy system, which plays a critical role in regulating cellular energy metabolism. The companies reason that the cellular redox network is an untapped reservoir of new drug targets, especially the brain.

Edison said its initial clinical focus will be inherited respiratory chain diseases of the mitochondria, rare pediatric diseases that manifest themselves as unambiguous genetic alterations in mitochondrial proteins responsible for energy generation and regulation.

“The broadening of our partnership with Edison reflects the success we have had to date in our current collaborative development programs. Compelling data suggest that the mitochondria and redox regulation play a central role in a variety of disease mechanisms,” Hiroshi Noguchi, Ph.D., DSP’s CSO and a member of its board of directors, said in a statement.

DSP will gain access to three jointly discovered compounds then fully fund their development in Japan and North America, with Edison retaining rights in the rest of the world. Edison will have worldwide rights to up to seven jointly discovered compounds, which DSP will fund through their IND filings with the FDA.

The new alliance expands a March 2013 collaboration between the companies, under which DSP gained development rights in Japan for two Edison compounds. In return, DSP agreed to pay Edison up to $580 million in up-front money, R&D support, development, commercial milestones, and royalties on sales, assuming one indication per compound since the original deal included Edison receiving between $10 million and $35 million per indication.

Edison seeks to develop the Phase IB drug candidate EPI-589 for adult central nervous system disease as well as EPI-743, an FDA-designated orphan drug in Phase II clinical development for inherited respiratory chain disorders, with ongoing placebo trials for Leigh syndrome, cobalamin C defect, undiagnosed disorders of oxidation-reduction, and Friedreich’s ataxia.

In November, Edison enrolled the first patient in a Phase II study of EPI-743 for Friedreich’s ataxia in adults with point mutations, in a trial to be held at University of South Florida (USF) Health and funded by a grant from the Friedreich’s Ataxia Research Alliance.

Under the new alliance, DSP will broaden its rights to EPI-589 to include North America, while Edison will retain 100% ownership of EPI-743 and continue to direct all research, clinical development, and commercial development outside of Japan.

In return, DSP will pay Edison $10 million up front; $40 million in R&D support; between $30 million and $105 million per indication associated with successful development of EPI-589 in North America; between $10 million and $30 million per indication in milestones associated with successful development of jointly discovered compounds in Japan and North America; up to $3.86 billion in commercial milestone payments for jointly discovered compounds and EPI-589 in total; and double-digit royalties on commercial sales.

DSP will also invest $50 million in Edison through a preferred stock purchase agreement, and will invest an additional $50 million at Edison’s discretion between the first and fifth anniversaries of the initial equity closing. The companies said DSP’s investment will enable Edison to build its commercial infrastructure in pediatric medicines, starting with EPI-743.

“Our partnership with DSP codifies a common vision for developing drugs targeting unmet medical needs,” said Guy Miller, M.D., Ph.D., Edison’s chairman and CEO.

Previous articleINFOGRAPHIC: Printing the Human Body
Next articlePsychoGenics Snares Tauopathy Mouse from Mayo Clinic, TET Systems