OSI Pharmaceuticals Inc. is joining forces with AVEO Pharmaceuticals Inc. to advance a cancer drug platform targeting epithelial-to-mesenchymal transition (EMT), a marker believed to be associated with tumor development and progression.

For OSI, which has been working to "evolve our research" over the last few years, the early stage deal signifies an "important R&D transaction," said CEO Colin Goddard. It also "coalesces the work that we've done in EMT," a process of tumor biology that OSI discovered while developing Tarceva, its cancer drug marketed with Genentech Inc. and F. Hoffmann-La Roche Ltd. EMT and its reverse, mesenchymal-to-epithelial transition (MET), potentially are linked to cancer treatment. For instance, Tarceva (erlotinib), an endothelial growth factor receptor inhibitor, yields better responses in cancer patients with tumors that are more epithelial, he said.

So OSI aims to build a pipeline of drugs that modulate EMT, along with biomarkers that can be used in future and existing clinical programs. The effort represents "the next step after targeted therapy," Goddard said, and moves toward the personalized medicine approach of getting "the right drug to the right patient at the right time." And, to that end, the Melville, N.Y.-based firm sought access to disease modeling and screening technologies and found AVEO as a "one-stop shop to help us with our programs," he added.

OSI will use AVEO's Human Response Prediction platform to discover drug compounds targeting EMT, as well as to validate additional cancer targets and to identify biomarkers to support ongoing development of OSI's clinical candidates.

The HRP technology is designed to recreate tumor activity in mouse models that "more faithfully recapitulates human disease," compared to traditional xenograft models, and allows researchers to identify genetic correlations between responding and nonresponding tumor populations to "come up with biomarkers that predict treatment response," said Elan Ezickson, chief business officer of AVEO.

AVEO will grant OSI access to its databases of tumor targets, looking specifically on tumor maintenance genes that drive EMT, and will use the HRP platform to create in vivo tumor models. From there, the companies will work on small-molecule drug discovery programs, collaborating on translational research programs for OSI's pipeline.

OSI will handle further development and commercialization of any small-molecule candidates emerging from the companies' joint efforts, while rights to antibodies and antibody-related biologics against any investigated target will be retained by AVEO.

The deal is a "very significant collaboration" for privately held AVEO, Ezickson told BioWorld Today. It provides "further validation of the value and scientific promise" of AVEO's cancer platform, and comes with an immediate financial upside - terms call for OSI to pay $10 million in cash up front, plus purchase an equity investment valued at about $5 million - as well as $2.5 million per year in research funding for three years, and the potential for undisclosed milestones and royalties down the road.

Those resources are expected to support the firm's clinical pipeline of two small-molecule compounds, as well as "our rapidly maturing pipeline of antibodies" against cancer, Ezickson said.

While it works with AVEO on an earlier-stage platform, OSI continues advancing several clinical programs, including multiple Phase III studies of Tarceva in additional indications, with data from three studies, including two that test Tarceva in combination with Avastin (bevacizumab, Genentech), expected within the next year.

Also in oncology, the company has OSI-906, an oral inhibitor of insulin-like growth factor-1 receptor, in Phase I trials for cancer, and expects to move OSI-027, a next-generation mammalian target of rapamycin (mTOR) kinase inhibitor, into the clinic at the end of this year or early next year.

OSI's UK subsidiary, Prosidion Ltd., which focuses on diabetes and obesity, is set to move into Phase II studies with PSN9301, an oral dipeptidyl peptidase IV (DPP-IV) inhibitor, in Type II diabetes.

OSI, which reported a net income of $29.3 million, or 48 cents per share, for the second quarter, had about $253.9 million in cash as of June 30.

The company's shares (NASDAQ:OSIP) closed at $34.21 Tuesday, up 36 cents.

AVEO Growing Antibody Pipeline

The same day it signed the OSI collaboration, Cambridge, Mass.-based AVEO signed a nonexclusive license deal to gain access to Peptech Ltd.'s Superhumanisation technology to advance antibody programs, which Ezickson described as the "core of [AVEO's] internal drug discovery."

"We found that having internal capabilities to humanize antibodies was critically important," he added. In exchange for an undisclosed up-front payment and potential milestones and royalties, AVEO will be able to use Peptech's platform, which allows researchers to modify antibodies generated in animals so that they retain their therapeutic properties without risking rejection by the human immune system.

Sydney, Australia-based Peptech obtained the Superhumanisation platform through its $156 million merger with Sydney, Australia-based EvoGenix Ltd. in May. The deal with AVEO is the first since the acquisition. Prior to that, EvoGenix signed technology partnerships with London-based GlaxoSmithKline plc and Australian firms CSL Ltd. and Vegenics Ltd. (See BioWorld Today, May 8, 2007.)

AVEO continues work on its clinical-stage oncology pipeline, which includes two small-molecule compounds: AV-951, a second-generation pan-VEGF receptor inhibitor set to start Phase II trials, and AV-412, an EGFR/HER2 inhibitor in Phase I.

The firm also expects to enter the clinic soon with AV-299, an antibody targeting hepatocyte growth factor. AV-299 is part of the company's potential $477 million antibody collaboration with Kenilworth, N.J.-based Schering-Plough Corp. signed in April. (See BioWorld Today, April 5, 2007.)