AGT deal targets OTC obesity products

AGT Biosciences (ASX: AGT) has signed an agreement with US drug discovery company the Institutes for Pharmaceutical Discovery (IPD) to collaborate on the development of over-the-counter (OTC) drugs for obesity.

According to CEO Prof Greg Collier, the deal revolves around some targets for obesity treatments that will be screened against IPD's natural products library.

"The combination of AGT Biosciences' lead generation expertise with IPD's experience in developing market-ready over-the-counter medicines is a powerful mix. We are excited by the possibilities," he said.

The aim will be to produce what Collier refers to as dietary supplements, which in the US do not require FDA approval and can be marketed as OTC products. In Australia products are marketed as complementary medicine and require TGA approval.

The OTC market is being targeted because of its rapid time to market -- three to five years instead of seven to ten, he said. Adding to the attraction is the estimated US$12 billion market for OTC slimming products.

According to Collier, the deal completes AGT's position in the obesity market, with the company using their targets for diagnostics, human therapeutics and OTC drugs.

"The plan always was to leverage [our IP] in every direction we could," he said. "It shows the depth and potential for growth in the company."

In addition, he said, the shorter path to market would bring revenues into the company faster.

The agreement with IPD does not conflict with the company's target discovery agreement with Merck-Sante.

At the time of writing, AGT shares were trading 8.3 per cent higher at AUD$0.52.