Assistant Managing Editor

Though still a fairly new entrant to the metabolic disease space, courtesy of its July acquisition of DeveloGen AG, Evotec AG managed to ink an early stage partnership for a biologic beta cell regeneration program with AstraZeneca plc subsidiary MedImmune for up to €259 million (US$345.2 million).

Most of that money will come down the road – Evotec is getting €5 million at signing – and 30 percent of the up-front and milestone payments are owed to DeveloGen shareholders under the earn-out-structured buyout. But CEO Werner Lanthaler called it a "sweet deal" that could help advance a potentially disease-modifying approach for treating both Type I and Type II diabetes.

It also marks the first metabolic disease partnership signed by Evotec since it picked up fellow German firm DeveloGen for cash, stock and earn-outs, though it inherited two existing collaborations: a 2007 deal with Israel-based Andromeda Biotech Ltd. to develop immunomodulatory peptide fragment DiaPep277, now in Phase III testing in Type I diabetes, and a potential €237 million agreement signed last year with Boehringer Ingelheim GmbH for a preclinical insulin sensitizer to treat Type II diabetes. (See BioWorld Today, May 18, 2009, and July 16, 2010.)

Hamburg, Germany-based Evotec's strategy has been to partner out its technology and drug discovery services, usually in early stage alliances, like its 2004 research agreement with Boehringer Ingelheim in inflammation and immunology and its recent deal with Almirall SA to identify small-molecule ion channel modulators for respiratory disease.

Under its deal with MedImmune, Evotec is licensing rights to EVT770, the program incorporating beta cell regeneration factors, plus a pipeline of additional secreted factors. In exchange, it also gets research funding and will be entitled to "significant" royalties that provide an "upside for the program without any downside for Evotec," Lanthaler told investors on a conference call.

Tackling diabetes by regenerating insulin-producing beta cells marks a different approach from existing diabetes drugs such as metformin, thiazolidinediones and sulfonylureas, none of which target the underlying cause of the disease, said Cord Dohrmann, Evotec's chief scientific officer. He also pointed out that those drugs "all have suboptimal efficacy profiles and safety profiles."

In fact, safety concerns involving diabetes drugs prompted the FDA to revise its draft guidance in 2008 to require companies to expand clinical testing to include assessments for cardiovascular risk. (See BioWorld Today, Dec. 18, 2008.)

Evotec's and MedImmune's collaboration will focus on regenerating beta cells to increase insulin production. Diabetics suffer a reduction in beta cells, which is apparent even during early stages of disease progression, Dohrmann said. By delivering the secreted biologic factor, researchers hope to "restore in patients the ability to produce sufficient amounts of insulin."

Ideally, the treatment also would restore glycemic control and essentially reverse the progression of the disease and "return people to a normal metabolic state," he added.

Animal data so far have been promising, with the most advanced biologic factor identified successfully increasing the functional beta cell mass and improving glycemic control.

Dorhmann acknowledged the added possibility of using small-molecule drugs to stimulate beta cell regeneration, though he said that approach is not included in the MedImmune agreement.

Evotec isn't the only biotech with its eye on a developing a potentially disease-modifying treatment for diabetes. Tolerx Inc. recently began Phase III testing with oteliximab, a drug aimed at preserving the function of pancreatic beta cells by decreasing the growth of antigen-specific T-killer/effector cells while enhancing the growth of regulatory T cells. 2008 start-up Verio Therapeutics Inc. also has a program designed to stimulate beta cell insulin production. (See BioWorld Today, Sept. 24, 2010.)

Other approaches include Transition Therapeutics Inc.'s gastrin-based pipeline, licensed from Eli Lilly and Co., though the first compound to hit the clinic failed to meet efficacy endpoints. And Catabasis Pharmaceuticals Inc., which raised nearly $40 million in a Series A earlier this year, is hoping to treat Type II diabetes by targeting inflammation. (See BioWorld Today, April 22, 2010.)

Beyond diabetes, Evotec said it might be able to employ a similar concept to other indications such as heart failure, muscle regeneration, chronic kidney disease and other metabolic disorders.

Shares of Evotec (Frankfurt:EVT) gained €0.8 to close Wednesday at €2.87.