Staff Writer

Less than three months after selling preclinical hemophilia drug MAXY-VII to Bayer HealthCare in a deal worth up to $120 million, Maxygen Inc. is at it again.

This time, the Redwood City, Calif.-based biotech signed a potential $170 million partnership with Tokyo-based Astellas Pharma Inc. for preclinical autoimmune and transplant drug MAXY-4.

All of Maxygen's drugs seek to improve existing biologics, and MAXY-4 is no exception.

The CTLA4-Ig protein is similar to Bristol-Myers Squibb Co.'s rheumatoid arthritis drug Orencia (abatacept), but utilizes Maxygen's gene shuffling MolecularBreeding platform to improve binding. Maxygen spokesperson Michele Boudreau said MAXY-4 offers increased potency and may allow for subcutaneous injection rather than intravenous infusion.

Boudreau noted that Maxygen entertained multiple suitors for MAXY-4 but chose Astellas because the company "has a very good presence in immunology" through its marketed transplant drug Prograf (tacrolimus), which generated nearly $2 billion in global sales in 2007. Additionally, Astellas' proposal to look beyond autoimmune diseases and investigate MAXY-4 in transplant rejection "increased the value of the program," she added.

Under the deal, Maxygen will receive $10 million up front and up to $160 million in pre-launch milestone payments. The companies will codevelop the drug for autoimmune diseases in North America and Europe, while Astellas will handle autoimmune development for the rest of the world and transplant development worldwide. Astellas also will pay Maxygen an additional $10 million for preclinical expenses.

In exchange, Astellas gets worldwide rights to MAXY-4 in autoimmune and transplant indications. Maxygen will receive tiered double-digit royalties, and the biotech retains a copromote option in North America for autoimmune indications.

The back-end loaded MAXY-4 partnership contrasts with Maxygen and Bayer's front-end loaded deal for MAXY-VII, a drug designed to improve on NovoSeven (recombinant coagulation factor VII, Novo Nordisk A/S).

Under the MAXY-VII deal, which was structured to help Maxygen tighten its immunology focus by off-loading non-core programs, Bayer got complete control of the hemophilia drug in exchange for $90 million up front and $30 million in potential milestones. (See BioWorld Today, July 3, 2008.)

It remains to be seen what kind of deal structure Maxygen will choose for MAXY-G34, its Phase II G-CSF drug designed to improve on Amgen Inc.'s Neulasta (pegfilgrastim). Partnership discussions are underway, and Boudreau said that while Maxygen likes to do collaborative partnerships, the company is "open to all kinds of deals."

Yet potential partners may be concerned with Amgen's recent patent filing that could allow the big biotech to challenge Maxygen's MAXY-G34. Boudreau said the patent was "clearly aimed at out molecule" but added that Maygen is "confident in our patents and confident in our ability to take the molecule forward."

"We've always said we'd be surprised if Amgen didn't take steps to protect their franchise," she said. Nevertheless, investors seemed worried: they shaved 28 percent off Maxygen's stock price after the patent filing.

If Maxygen closes a deal for MAXY-G34, all of its programs will be partnered. Yet the company has plenty of cash: It reported $122.4 million at the end of the second quarter, not including the $100 million in up-front payments from its two recent deals. A MAXY-G34 deal could bring more cash, as would any milestones that may be earned in the interim.

Boudreau said the company is "very interested in broadening our pipeline" and may put some of its cash to work in licensing or acquisitions.

Shares of Maxygen (NASDAQ:MAXY) rose 21 cents to close at $5.03 on Friday.