Epix Pharmaceuticals, headquartered in Ramat Gan and Massachusetts, on Tuesday signed a $35 million collaboration agreement with Europe's largest drug maker GlaxoSmithKline, which could bring in revenues of as much as $1.2 billion as the two companies work to develop and market medicines for the treatment of various diseases. Reaching the $1.2b. figure will be dependent on the achievement of certain development and marketing milestones. Half of the initial $35 million payment was paid through the purchase of some 3 million Epix shares by Glaxo. "This is the biggest deal in the history of Israeli biotech," Oren Becker, chief scientific officer at Epix, told The Jerusalem Post. "Not only in its monetary value, the deal gives us access to markets in which Glaxo is strong and allows us to continue as an independent entity." Under the agreement, Epix will be responsible for the discovery and development of small molecule drug candidates targeting four GPCRs (G-protein coupled receptors), including its PRX-03140 for the treatment of Alzheimer's disease, through to clinical proof of concept. Glaxo will then have an exclusive option to license each product for further development and its global commercialization. While the company would not give a timetable for its development forecasts, analysts were skeptical whether such high milestone potentials would be reached. "One can only go on the shareholder stake as being a gauge of the deal size and it looks to me that the price is par for the course for companies in early stage projects," said Nick Turner, an analyst at London-based Mirabau Securities. "The real changes in valuation would have to come from clinical data from the programs and who can say what will happen, but the balance of probabilities is that the $1.2b. is a fictitious number which might get triggered but is very unlikely." "Partnering with a blue-chip company like Glaxo helps attract investors and certainly lifts Epix to the next tier of the analyst watch-list," he added, saying that the $35m. would enable the company to push forward in development projects that aren't partnered. Epix and Glaxo will choose the remaining three projects to include in the program along with Epix's PRX-03140 for the treatment of Alzheimer's which is currently in phase-2 development. Epix has five internally discovered therapeutic and imaging drug candidates currently in clinical trials targeting conditions such as depression, Alzheimer's, cardiovascular disease and obesity. Becker stressed that all the technological ability and research for the projects will be done at Epix's Ramat Gan facility. The deal comes just three months after the merger between Epix, headquartered at the time in Massachusetts and Predix Pharmaceuticals Holdings, which Becker had established based on technology developed at Tel Aviv University . The combined company employs 100 people, 25 of whom are in Israel. Epix signed similar partnership agreements with other companies and Chen Schor, Epix's chief business officer told the Post it would continue the strategy in the future, dismissing claims that the company may be a potential acquisition target. "Our goal from the start of Predix has been to grow into a real bio pharmaceutical company," Schor said. "One of the attractive things about this agreement is that we have other projects that we will continue independently." Epix also said Tuesday it expects to end 2006 with more than $100m. in cash and marketable securities, sufficient to fund operations through 2008.