Staff Writer

Clinical Data Inc. entered a collaboration and licensing agreement with CombinatoRx Inc. to develop an adenosine A2A agonist compound in a combination therapy for multiple myeloma and other B-cell cancers, but the deal might be more strategic than lucrative.

Under the terms, Clinical Data licensed ATL313 to CombinatoRx in exchange for up to $252 million in clinical, regulatory and commercial milestones, as well as royalties on product sales.

There is no apparent up-front payment coming from Cambridge, Mass.-based CombinatoRx, which is low on cash and has its own set of programs that need funding. At the end of June, CombinatoRx reported having just $30.6 million in cash and equivalents, compared to $39.2 million the previous quarter.

So while it may look "a little weird" for a company hurting for cash to be entering such a deal, no dollars are changing hands at this point, analyst Gregory Wade, of Wedbush PacGrow Life Sciences, told BioWorld Today. "It's all about getting the ball down the field a little bit."

CombinatoRx will be responsible for the preclinical and clinical development of ATL313 as a potential treatment for B-cell malignancies. Such cancers include non-Hodgkin's lymphoma, chronic lymphocytic leukemia, multiple myeloma and other malignancies commonly treated by stem cell transplantation.

Although oncology development is expensive, Wade said promising early data could boost the company's valuation. CombinatoRx also could be reimbursed for expenses under the deal, he said.

Research thus far has shown that a combination drug approach using adenosine A2A agonists has broad activity in multiple myeloma cell lines and synergy with multiple myeloma standard-of-care therapies, according to Newton, Mass.-based Clinical Data. In addition, results so far have demonstrated potent induction of apoptosis, selectivity and safety.

As for funding its own pipeline of midstage programs, including Synavive for arthritis pain, CombinatoRx has a few possible options, such as partnering, securing additional equity and picking up potential milestone payments stemming from Exalgo, a product it acquired through a merger with Canadian drugmaker Neuromed Pharmaceuticals Inc. (See BioWorld Today, July 2, 2009.)

Exalgo is under FDA review as a potential once-daily hydromorphone treatment for chronic pain, and an agency action date is set for Nov. 22. Approval would trigger a $30 million milestone, which potentially could increase up to $40 million, plus tiered royalties on Exalgo net sales after U.S. approval.

Vancouver, British Columbia-based Neuromed recently sold the U.S. rights to Exalgo to Mallinckrodt Inc., a subsidiary of Dublin, Ireland-based Covidien plc, in a deal worth potentially $71 million, including $15 million up front, and tiered royalties.

As for Clinical Data's cash, the company's balance sheet is "in OK shape," Andrew Vaino, an analyst with Roth Capital Partners told BioWorld Today. He estimated that the company's cash could last through the first or second quarter of next year. Vaino said he was not expecting a deal on ATL313 and that he does not see how it helps the company short term. "It wasn't a particularly rich deal," he said. Still, he added, he likes the stock solely because of depression drug candidate, vilazodone.

Clinical Data has reported positive results from a confirmatory Phase III trial of lead drug candidate vilazodone in depression. Those results will contribute to a new drug application that is expected to be submitted to the FDA by year-end.

Shares in CombinatoRx (NASDAQ:CRXX) gained 9 cents to close Thursday at $1.14. Shares in Clinical Data (NASDAQ:CLDA) fell 2 cents, to close at $15.14.

Published  August 14, 2009