Staff Writer

Less than a month after licensing a Phase II West Nile virus vaccine from Acambis plc, Sanofi Pasteur entered a preclinical dengue virus vaccine deal with Maxygen Inc.

Redwood City, Calif.-based Maxygen stands to receive $24.5 million in up-front and milestone payments for its portfolio of dengue virus antigens. Sanofi Pasteur, the vaccine arm of Paris-based Sanofi-Aventis Group, will use the antigens to create a dengue vaccine and will pay Maxygen royalties on worldwide commercialization.

Michele Boudreau, director of investor and public relations for Maxygen, said the up-front component of the deal is "not material enough to disclose." Yet Maxygen is not strapped for cash: the company reported $157.1 million in cash, equivalents and marketable securities as of Sept. 30 after incurring $17.5 million in operating expenses for the quarter.

The market for a dengue vaccine could top $1 billion. The World Health Organization estimates the disease may affect 50 million people each year, and a vaccine could be marketed to the military, international travelers and both public and private health care initiatives in the 100 countries where the disease is endemic. Yet any effective vaccine would need to protect against all four virus serotypes - the WHO has stated that vaccination against only one or two serotypes actually might increase the risk of dengue hemorrhagic fever.

GlaxoSmithKline plc and Sanofi both have tetravalent dengue vaccines in Phase II development. Yet Boudreau noted that these first-generation approaches require the combination of separate vaccines against each of the four serotypes into a single product, a process that requires complex manufacturing.

Using its MolecularBreeding technology, Maxygen recombined segments of DNA from all four serotypes to create single antigens capable of protecting against all four strains of the virus.

Inviragen LLC and Hawaii Biotech Inc. also are pursing recombinant vaccines that would protect against all four dengue serotypes. Inviragen expects to begin clinical trials in the second half of 2008.

Other dengue programs in preclinical or early clinical development include AVI BioPharma Inc.'s antisense approach, Immunotope Inc.'s immunoproteomics approach and Bavarian Nordic's MVA platform approach.

With the dengue program now in Sanofi's hands, Maxygen can focus its attention on the rest of its pipeline. Lead product MAXY-G34, a recombinant version of granulocyte colony stimulating factor (G-CSF) designed to improve on Neulasta (pegfilgrastim, Amgen Inc.), is undergoing a Phase II trial for neutropenia in patients with breast cancer. Boudreau said the company will provide an update on the trial in the first quarter of 2008.

In the first half of 2008, Maxygen expects to file an investigational new drug application for hemophilia treatment MAXY-VII, which is designed to improve on NovoSeven (recombinant coagulation factor VII, Novo Nordisk A/S). The company also is conducting early preclinical work on MAXY-4, a rheumatoid arthritis drug similar to Orencia (abatacept, Bristol-Myers Squibb Co.).

Not moving forward for now is MAXY-alpha, a pegylated interferon-alpha product for hepatitis C and hepatitis B. The drug showed lower serum levels than expected in a Phase Ia study, prompting partner F. Hoffmann-La Roche Ltd. to place a hold on the trial and later return rights to the drug to Maxygen. (See BioWorld Today, Sept. 24, 2007.)

Boudreau said the company is "evaluating the situation" at this time and hasn't made any decisions regarding the long-term future of MAXY-alpha.

Shares of Maxygen (NASDAQ:MAXY) fell 6 cents Tuesday to close at $7.45.