United States-based Janssen Biotech is co-developing Cayman Islands-based Theravance's TD-1473 and associated backup compounds, it was reported yesterday.

The product is intended for inflammatory intestinal diseases, including ulcerative colitis and Crohn's disease, through a contract that is potentially worth around USD1bn. It is designed to work directly at the site of inflammation in the intestinal wall to limit systemic exposure.

Both firms have signed a global co-development and commercialisation contract that could generate up to USD1bn for Theravance. The company's product is an internally-discovered Janus kinase inhibitor that has indicated a high affinity for each of the JAK family of enzymes. Both firms will jointly develop and commercialise TD-1473 in inflammatory intestinal diseases, while sharing profits in the US and expenses related to a potential Phase three program. This year, Theravance intends to begin a Phase 2b/3 adaptive design induction and maintenance study in ulcerative colitis with TD-1473. The firm is also planning to start a phase 2 study in Crohn's disease during the same year.

Under the terms of the deal, Theravance will secure an upfront payment of USD100m. It is also eligible to receive up to an additional USD900m in potential payments, if Janssen decides to continue collaboration following the completion of certain Phase three activities.