Staff Writer

AEterna Zentaris Inc. has agreed to license its lead product cetrorelix, a potential treatment for enlarged prostate glands, to Sanofi-Aventis U.S. in a deal worth more than $165 million.

Under the terms, AEterna will get $30 million up front and up to $135 million in future milestones plus royalties. Shares in Quebec-based AEterna shot up 34 percent on news of the deal.

Including money from the deal, AEterna's expected cash for the end of 2008 could be close to $77 million, with a burn close to $4 million to $6 million per month, based on the company's guidance to investors. The company plans to disclose its financial results next week.

AEterna's partnership with Sanofi comes ahead of Phase III efficacy results for cetrorelix, which are expected during the third quarter with a new drug application filing anticipated in 2010.

The product is being studied in three Phase III studies, all of which have completed patient recruitment. The first results, due in the third quarter, will come from the efficacy study in North American, while data from the second efficacy study in Europe and a safety trial are expected in the fourth quarter.

AEterna will take the program through the end of Phase III, and Sanofi will responsible for Phase IIIb, Phase IV and all U.S. commercial activities. That still leaves Canada and Europe for possible additional alliances for AEterna, Dennis Turpin, senior vice president and chief financial officer, told BioWorld Today.

Sanofi-Aventis U.S., based in Bridgewater, N.J., was AEterna's primary target for a U.S. partner with its "strong presence in urology," Turpin said. The Canadian biotech was looking for a strategic fit, and Sanofi had a U.S. corner in the urology space, with drugs like Uroxatral, Eligard and its partnered drug with Eli Lilly and Co., Cialis, he explained.

Brent Ragans, vice president of the general therapeutics business unit at Sanofi-Aventis U.S., said in a statement that, "Cetrorelix is a strategic fit with our urology specialty sales force, which is highly experienced in the promotion of products for urologic health."

Cetrorelix is a reformulation of AEterna's marketed product, Cetrotide for in vitro fertilization. The company also is running Phase II trials of its other product, AEZS-108, for ovarian and endometrial cancer.

Although patients generally prefer oral treatments over taking shots, AEterna's injectable product may have an advantage over existing oral treatments that are taken daily and have sexual side effects such as erectile dysfunction in some men.

Kevin DeGeeter, an analyst with Oppenheimer & Co., told BioWorld Today that AEterna's product is administered once every six months and therefore could result in better compliance. He pointed out that more than 90 percent of patients who completed enrollment chose the option to remain on treatment.

In addition, DeGeeter said, the AEterna product appeared to have meaningfully fewer side effects and efficacy that is "as good or incrementally better" than currently available products.

He said his sense is that it was an asset that had "been making the rounds" for a while for business development. But he said, "It's fair to say, this was a good deal." He estimated that cetrorelix could be a $300 million to 400 million a year specialty niche product for Sanofi.

The noncancerous enlargement of the prostate gland, known as benign prostatic hyperplasia (BPH), is one of the most common diseases of aging men - affecting more than 20 million men in the U.S., according to AEterna.

The current market for BPH products is close to $3 billion, Turpin said, citing 2007 data from Decision Resources.

AEterna has studied its BPH product as a second- or third-line therapy. The product belongs to a drug class known as luteinizing hormone-releasing hormone antagonists, and AEterna said its drug candidate is the most advanced of its kind in the world.

Shares in AEterna Zentaris (NASDAQ:AEZS) rose 24 cents, or 33.8 percent, closing at 95 cents.

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