By Karen Pihl-Carey

Staff Writer

Novartis Pharma AG pulled out of its partnership with Isis Pharmaceuticals Inc. to develop two anticancer compounds.

Isis said the Novartis decision gives it 100 percent rights to Isis 3521 and Isis 5132. Based on positive clinical data, the company plans to move Isis 3521 into a Phase III trial for non-small-cell lung cancer. And part of a new $120 million equity financing for 2000 will help fund the trial, the company said.

Stanley Crooke, chairman and CEO of Carlsbad-Calif.-based Isis, said Novartis, of Basel, Switzerland, decided to end the relationship to concentrate on other compounds in its pipeline.

"Their view is that they have other projects that they need to fund and they chose to fund those," Crooke said in a conference call after the market closed Monday. "The terms of the transaction were that they can't pick and choose. They have to fund the total development. They have to fund to market. So I think with Isis 3521, we have clear evidence that this is a drug worth developing. With Isis 5132, it's certainly too early to call, but we don't have the activity that we do with Isis 3521, and I think that was another factor in the Novartis decision."

Crooke said the decision to move Isis 3521 into a Phase III trial was based on data from a Phase I/II study presented at an international cancer conference in Washington last week. Results showed that 13 of 15 patients with non-small-cell lung cancer benefited from combination therapy of Isis 3521 with carboplatin and Taxol (paclitaxel). They showed objective responses or stable disease lasting from more than two months to more than 13 months so far. Seven patients have lived more than a year, with the longest survival at 21 months. After an average of eight months of follow-up, 90 percent of the patients are alive and continuing to be evaluated. The combination therapy not only seemed effective, but also did not increase toxicity, Crooke said.

"If you look at the patients in this trial, they're comparable to patients who have been studied in carboplatin and Taxol studies in the past," he said. "We would have expected survival at less than seven months. ... We're planning to continue to enroll in the Phase II trials, while we're preparing for the Phase III programs. This is an exciting moment for us."

Isis filed a registration statement to issue up to 4 million shares of common stock pursuant to the $120 million in equity financing. The shares will be placed through Ridgeway Investment Ltd. with funds managed by a major offshore financial institution.

"The financing provides us with a lot of financial flexibility," said B. Lynne Parshall, executive vice president and CFO of Isis. "The terms are extremely favorable to us. We control access to the money. We sell the stock to the investor at a very small discount to our stock price. In addition, we're not obligated to draw down any portion of the money. So we choose when, and how much and if."

The financing also gives the company bargaining power with potential marketing partners for Isis 2302, an antisense inhibitor of ICAM-1 that is completing pivotal trials in Crohn's disease and Phase II trials in renal transplant rejection. Without the need for up-front money, the company can ask for a larger percentage of sales, Parshall said.

Isis 3521 also is in Phase II studies for ovarian cancer, breast cancer and non-Hodgkin's lymphoma, as well as Phase I combination studies with Isis 5132. Isis 5132 is in Phase II trials for breast and ovarian cancers. All Phase II trials are expected to be completed by late 2000.

Crooke said he expects Isis 3521 will move into a Phase III trial in non-small-cell lung cancer in mid-2000. Isis 3521 is an inhibitor of protein kinase C-alpha expression, while Isis 5132 is an antisense inhibitor of c-raf kinase, which plays a role in signal processes that regulate cell growth and is thought to play a role in the development of some solid tumors.

Isis recently regained all rights to Isis 2302 from Boehringer Ingelheim International GmbH, of Ingelheim, Germany, its five-year developmental partner. (See BioWorld Today, Sept. 3, 1999, p. 1.)