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Metabasis Gets $10M Up Front in Roche HepDirect Collaboration

Staff Writer

Metabasis Therapeutics Inc. signed a $203 million research collaboration with F. Hoffmann La-Roche Ltd., resulting in some much-needed validation for its HepDirect liver-targeting technology as well as a boost to its stock price and cash balance.

Under the terms of the deal, Metabasis will get $10 million up front for applying its HepDirect technology to an undisclosed Roche nucleoside for hepatitis C.

Paul Laikind, president and CEO of San Diego-based Metabasis, predicted that the initial work would be completed within a year but noted that the partnership may be extended through a second year so that Metabasis can evaluate backup compounds.

If that happens, Roche will provide additional research and development funding, Laikind told BioWorld Today.

Roche will assume development responsibility and retain worldwide rights to any product candidates resulting from the collaboration and will pay Metabasis up to $193 million in milestones for each product, as well as royalties on future sales.

The milestone payments are triggered by various preclinical, clinical, regulatory and commercial events, but Laikind said the "largest portion" of the money is tied to preclinical and clinical achievements. Royalties are in the high single-digit to low double-digit range.

Susquehanna Financial Group analyst Jason Kolbert called the collaboration "the richest deal we've seen for this type of technology." He added that he was "very impressed" by Roche's rapid due-diligence effort, which he said reflects the mindset that the company "had to have" the HepDirect technology.

HepDirect involves creating prodrugs that are stable in the bloodstream but become activated in the liver. The goal is to increase the concentration of drug in the liver and keep it from leeching out into other parts of the body, enhancing efficacy while at the same time allowing for a lower dose and decreasing side effects.

Yet the most advanced HepDirect product, hepatitis B drug pradefovir, has faced a rocky path. Metabasis originally licensed the adefovir prodrug to Valeant Pharmaceuticals International, and a Phase II trial demonstrated that it significantly reduced viral load compared to Hepsera (adefovir dipivoxil, Gilead Sciences Inc.). But restructuring led Valeant to out-license the drug to Schering-Plough Corp., which "never did anything with it," Laikind said. (See BioWorld Today, Dec. 15, 2006.)

Last year, after a 24-month oral carcinogenicity study in rodents indicated an increased incidence of cancer at the higher doses, Schering dumped the drug back in Metabasis' lap. And despite Laikind's assurances that the carcinogenicity data were a class effect and not a "blight on HepDirect," investors fled the stock. (See BioWorld Today, July 18, 2007.)

Roche's endorsement eased reservations about HepDirect. Although the Roche target was not disclosed, Kolbert reasoned that it could be R1626, which has been associated with anemia resulting from systemic exposure and would benefit from more targeted delivery, he said.

Buoyed by the money and HepDirect validation, Metabasis' stock (NASDAQ:MBRX) gained 15 cents, or 12 percent, to close at $1.41 on Friday.

Laikind noted that Metabasis also has HepDirect partnerships with Merck & Co. Inc. and Idenix Pharmaceuticals Inc., as well as multiple internally developed HepDirect products.

Pradefovir, although the most advanced, falls outside of Metabasis' core focus in metabolic disease, so the company is seeking a new partner for the drug. Ditto for MB07133, a HepDirect prodrug of an activated form of cytarabine, which has completed a Phase I/II trial in liver cancer.

But Metabasis is holding on to MB07811, a HepDirect beta-subtype-selective thyroid hormone receptor agonist for hyperlipidemia. In a recently completed Phase Ib trial, the drug was well tolerated and resulted in significant reductions in cholesterol and triglycerides. Laikind said he has received interest in the drug from "just about every company in the world that works on metabolic disease," but Metabasis plans to advance the drug internally through Phase II trials, which are scheduled to begin later this year or early next year.

Metabasis' metabolic disease pipeline also includes the non-HepDirect drug MB07803, an inhibitor of fructose-1,6-bisphosphatase for Type II diabetes. Phase IIa data showed the drug significantly reduced fasting plasma glucose, and a dose-optimization trial is planned for later this year, to be followed next year by a Phase IIb trial, potentially with a partner.

Metabasis has other programs in preclinical studies.

As of June 30, Metabasis reported $32.5 million in cash and available securities after spending $12.2 million on operating expenses during the quarter.

Published: August 11, 2008