Editor

Nuts.

Last month, when the FDA approved Xolair for asthma, there was much rejoicing by Genentech Inc., Tanox Inc. and Novartis Pharma AG, which developed the monoclonal antibody in a three-way deal.

Still unclear, though, is whether (or when) clinical work will continue with TNX-901, a treatment for peanut allergies that - like Xolair - targets immunoglobulin E. And that's been a source of frustration for some investors as well as for about 1.5 million people who suffer with peanut allergies.

Shelley Schneiderman-Ducker, manager of corporate relations for Genentech, said the trio is "absolutely committed to bringing an anti-IgE forward" for the condition.

The question is: Which one?

Having put legal problems behind them, development teams from all three firms are trying to figure that out, she said. The three-way deal was born out of strife. It was devised as their way of settling a dispute regarding alleged breach of contract and patent infringement that began in 1993.

And, as late as October of last year, skirmishing continued. An arbitration panel said Tanox, under its 1990 agreement with Novartis, has no right to independently develop TNX-901, although a U.S. district court judge one year earlier had said the opposite and ruled that Tanox could use information acquired in the course of the three-way deal. The panel also said Novartis is obligated under the agreement to share with Tanox its "know-how" regarding Xolair (omalizumab).

Tanox's stock took a hit with the October panel finding, after which it rallied somewhat, and then fell at the end of January. The stock has gained since then, as the market anticipated Xolair's approval. David Webber, analyst with First Albany Corp., said "nothing was going to happen [with TNX-901's development] until after Xolair was approved."

Now that it has been, he told BioWorld Financial Watch, "I think they will try them both. My guess is that their druthers would be to go ahead with Xolair if it looks to be equally effective."

In March, at the 60th annual meeting of the American Academy of Allergy, Asthma and Immunology in Denver, Tanox offered positive Phase II data from a trial with TNX-901.

"You have to bear in mind that was an 84-patient trial," Schneiderman-Ducker said, adding that it was a dose-finding study in which three doses were tested and only one group showed TNX-901's efficacy, albeit strong.

Tanox, meanwhile, will profit from Xolair for asthma, of course. Its estimated cost is $433 per vial, with a standard dosing of two vials per month, or $10,392 annually. About a third of patients could get up to four vials per month, if their body weight and/or serum IgE levels are high. Sales are estimated in the range of $10 million in 2003 and $90 million in 2004, and Tanox takes a 10 percent royalty.

But about 1.5 million people suffer peanut allergies in the U.S., a sizable market that TNX-901 seemed ready to capture. Schneiderman-Ducker cautioned that "these are injectable biotech drugs, serious drugs" that would be used only in the worst-case patients.

The FDA has even granted the drug fast-track status, although the designation seems ironic now and may also have led to misunderstandings among laypeople, she told BioWorld Financial Watch.

"Fast-track designation doesn't influence anything up until when you file [a new drug application]," she said. "It means they put you on top of their list. But fast-track designation can come two or three or four years before you file."

Not all Phase II trials lead directly into Phase III anyway, she noted - especially not when the Phase II trials are small, like the one for TNX-901.

"Often there are a lot of them done," Schneiderman-Ducker said.

With Xolair, Genentech had data on 2,000 patients "and the FDA came back and asked us to double that," she said. "Who's to say they wouldn't want [the same] with this other anti-IgE?"

Michelle Desantis, corporate communications specialist for Tanox, said TNX-901 was "ready to go into Phase III" but both potential peanut allergy products will need plenty more research, and determining which might take longer is unclear. She said a decision on how next to proceed is expected "by the end of this year."

The mainstream media latched onto the story late last month, with the Associated Press reporting that TNX-901's progress - and relief for sufferers of peanut allergies - has been "trumped by bitter infighting and squabbling among corporate partners over potential profits."

Webber and Schneiderman-Ducker said the matter is less dramatic than that. He called it "reportorial recycling" and she said the story "is being construed to be a story it isn't." Both said the next step boils down to science.

"I think this [legal] matter is straightened out," Schneiderman-Ducker said. "We're certainly aware of the coverage, and there are some very active food-allergy groups we've been in dialogue with."

One is the Food Allergy Initiative, whose administrative director is Amie Rappoport.

"We're pleased they have resolved their issues with regard to moving one of the drugs forward," she told BioWorld Financial Watch. FAI also is pleased that the companies have agreed to let patients enrolled in the TNX-901 keep getting the drug.

"It took a long time to get patients signed up to participate in this study," she said. "The food they've tried to avoid their entire lives they are faced with eating. They really are heroes." (The nature of the challenge trials also makes them difficult to enroll, noted Schneiderman-Ducker.)

Rappoport said results from a prevalence study on peanut allergies are due in the fall and may give an idea of how many serious cases exist.

"It will tell us whether there's been an increase in children, which is what we expect, and should have some indication of the severity of the reactions," she said.

Meanwhile, Webber said that, although TNX-901 might have seemed destined for Phase III trials shortly, and therefore a better choice than Xolair to try against peanut allergies, Xolair is backed by a "huge safety database" - and has the advantage of already being approved in one indication.

"There's a hypothesis or the supposition at least that Xolair might have very similar activity as TNX-901," he said. "Obviously there are differences, but they bind to the same place."

Whatever the ultimate decision about whether the companies seek an NDA for TNX-901 or Xolair, Schneiderman-Ducker said, "we want to do some exploratory work with Xolair in peanuts," investigations unrelated to the commercial opportunity.

"We're certainly advising physicians not to use it off label for peanuts, but there are certain physicians who are going to be cowboys," she said, and the companies want to find out more about how well Xolair functions "so the doctors aren't using it in a knowledge vacuum."

Eyebrows rose at Genentech upon seeing an interview with one of the Xolair trial participants who said he "was so happy because he can go out and eat shellfish," she said. "We were all cringing." If a peanut allergy label were gained, "this is not a drug people can take and then go out and eat a Snickers bar," she added.

Exploratory work of the same kind likely will be done with TNX-901, Schneiderman-Ducker said.

"We're trying to put our cards on the table as they are," she said. "There's a lot going on."