French pharmaceutical giant Sanofi-Aventis will pay $140 million to Exelixis, Inc, to develop two experimental cancer drugs, in a deal that could potentially yield over $1billion to the South San Francisco-based  biotechnology researcher after developmental, regulatory, and commercial milestones are achieved.

Paris-based Sanofi-Aventis signed a global license agreement with its partner South San Francisco-based Exelixis for XL147 and XL765 and an exclusive collaboration for the discovery of inhibitors of phosphoinositide-3 kinase (PI3K) for the management of solid malignancies.

In the deal Sanofi-Aventis will pay up Exelixis $140 million with a further guaranteed research funding of $21 million over three years and over several years, Exelixis has the potential to earn over $1 billion in development, regulatory and commercial milestone payments.

Sanofi-Aventis will have an exclusive worldwide license to XL147, an oral PI3K inhibitor, and XL765, an oral dual inhibitor of PI3K and mTOR (mammalian target of rapamycin), both of which, are currently in phase 1 clinical trials.

Sanofi-Aventis said that it will have sole responsibility for all subsequent clinical, regulatory, manufacturing and commercial activities but Exelixis will participate in ongoing and potential future clinical trials.

Under the exclusive discovery collaboration, Sanofi-Aventis and Exelixis will combine research efforts to establish several preclinical programs related to isoform-selective inhibitors of PI3K.

Both drugs are used in the treatment of cancer and targets an enzyme called phosphoinositide-3 kinase, or PI3K. The phosphoinositide-3-kinase (PI3K) pathway is triggered in normal cells upon exposure to growth factors.

It regulates a cascade of proliferation and survival signals. The PI3K pathway is one of the primary deregulated signaling pathways in human cancer. Activation of the PI3K pathway is a frequent event in human tumors, promoting cell proliferation, survival, and resistance to chemotherapy and radiotherapy. Novel therapeutics impacting the PI3K pathway, alone or in combination, are therefore considered to have a high therapeutic potential.

The XL147 is an orally available small molecule inhibitor of phosphoinositide-3-kinase (PI3K). XL765 is an orally available small molecule, dual inhibitor of PI3K and mTOR (mammalian target of rapamycin). mTOR can be activated via upregulation of PI3K, or via PI3K-independent mechanisms. mTOR is frequently activated in human tumors, and plays a central role in tumor cell proliferation.

''We are very excited about integrating such novel targeted therapies with high therapeutic potential in our portfolio,'' said Marc Cluzel, Senior Vice-President R&D, Sanofi-Aventis.

''We look forward to combining our efforts with Exelixis to develop innovative drugs in the best interest of patients suffering from cancers. This alliance is aligned with our strategy to create value through strategic partnerships that deliver new therapeutic options,'' he added.

Despite the ongoing global recession, the pharmaceutical industry worldwide seems to be immune to the economic meltdown with mergers and acquisitions being done in a large scale.

Since the beginning of this year, large players in the industry like Pfizer acquiring Wyeth, Merck merging with Schering-Plough, GlaxoSmithKline and Pfizer combining their HIV drugs businesses into a new company, Canadian specialty pharmaceutical company, Biovail Corp, acquiring the worldwide development and marketing rights to the privately-owned Cambridge Laboratories (Ireland) Ltd's tetrabenazine product are among the many concluded deals in the global pharmaceutical industry.

In December, Exelixis had signed an agreement with Bristol-Myers Squibb for global collaboration covering two novel molecules for cancer with their associated development programs. (See: Bristol-Myers Squibb, Exelixis to collaborate on two novel cancer molecules)

The two Exelixis molecules are XL184, a small molecule inhibitor of MET, VEGFR2 and RET, which is currently in Phase III development for medullary thyroid cancer; and Exelixis' XL281, a small molecule inhibitor of RAF kinase, which is currently in Phase I development for the treatment of patients with advanced solid tumor malignancies.

Under the deal, Bristol-Myers Squibb had agreed to pay Exelixis an upfront cash payment of $195 million for the development and commercialisation rights for both programmes and to make additional license payments of $45 million this year.

Last month Sanofi-Aventis had signed an agreement for the acquisition of BiPar Sciences Inc, a privately held US biopharmaceutical company, developing novel tumorselective approaches for the treatment of different types of cancers. (See: Sanofi to buy US cancer drug firm for about $500 million)

BiPar is the leading company in the emerging field of DNA repair using PARP (Poly ADP-Ribose Polymerase) inhibitors. PARP inhibitors represent a new, targeted approach to treating many types of cancers.