Staff Writer

Merck & Co. Inc. said that a shift in its portfolio priorities prompted the company to return to AVEO Pharmaceuticals Inc. worldwide development and commercialization rights to Phase II anticancer candidate AV-299.

Merck's integration process since it merged with Schering Corp. last year is still ongoing. David Nicholson, senior vice president and head of worldwide licensing and knowledge management at Merck, said in a statement, "The decision to return this program to AVEO is a result of portfolio prioritization."

AV-299 showed good results in Phase I, and top-line data from a Phase II lung cancer trial of that antibody are expected in late 2011. The study data surrounding AV-299 are "not in any way associated with this decision" by Merck to hand back the rights, David Johnston, chief financial officer at AVEO, told BioWorld Today.

Prior to its acquisition of Schering, AVEO had initiated a Phase II program with AV-299, triggering an $8.5 million milestone.

But no milestones were anticipated for either this year or in 2011 in connection with the AV-299 agreement. "We are not missing out on anything in the near term," he said when asked about potential milestones.

AVEO is still sorting out the details of what its investment will be going forward in AV-299, an anti-hepatocyte growth factor (HGF) antibody it discovered. But Johnston emphasized, "We are committed to moving the program forward."

He indicated that AVEO has sufficient funds to invest in AV-299 while also moving forward on its plan to report top-line results in mid-2011 from a Phase III trial (TIVO-1 study) of tivozanib in patients with renal cell carcinoma. Tivozanib, an oral, triple VEGF receptor inhibitor is being studied alongside sorafenib (sold as Nexavar by Onyx Pharmaceuticals Inc./Bayer AG) in advanced kidney cancer, as well as additional clinical studies in other solid tumor types.

AVEO also has an antibody in early development, anti-ErbB3 antibody AV-203, partnered with Biogen Idec Inc., in which AVEO retains exclusive North American rights. "We now have three leads, all of which where we have significant commercialization rights," Elan Ezickson, executive vice president and chief business officer at AVEO, told BioWorld Today.

Under a 2007 agreement, Schering Corp. (acquired by Merck) was granted worldwide rights to develop and commercialize AV-299. Under the terms, Merck funded all research and development expenses and was obligated to pay development milestones, and royalties on any product sales.

AVEO retained primary responsibility for certain development activities through completion of the first Phase II proof-of-concept trial, and for conducting translational research.

AVEO has received $55 million in total funding under the agreement, including $7.5 million up front, Johnston said.

Av-299 is targeted at a popular cancer target known as HGF/c-MET that is believed to play a role in multiple cancer-related processes such as tumor growth, invasion and metastases.

Phase II data suggested that it may be beneficial to combine an inhibitor of the c-MET pathway with an epidermal growth factor receptor (EGFR) tyrosine kinase inhibitor (TKI) in patients with advanced, refractory non-small-cell lung cancer. Data from Phase 1 trials of AV-299 indicated a favorable tolerability profile and good combinability with EGFR inhibitors, erlotinib (Tarceva) and gefitinib (Iressa).

In some cases, companies have handed back rights after unfavorable study results or an unfavorable regulatory decision. For instance, Abbott Respiratory LLC handed back U.S. rights to an asthma drug candidate to London-based SkyePharma plc several months after the FDA said that further clinical trials would be needed to file for regulatory approval. As a result, Abbott lost out on potential future milestone payments in excess of $150 million. (See BioWorld Today, Aug. 23, 2010.)

In other cases, the drug under development may no longer fit with the company's pursuits, as appears to be the case with Merck and AV-299.

It certainly would not be the first time that Merck has changed its mind about a product candidate due to a shift in direction.

In 2004, Merck licensed depression drug candidate EB-1010 and related compounds from DOV Pharmaceutical Inc. in a $455 million deal. But the drugmaker later decided not to focus on depression and handed the compounds back. (See BioWorld Today, Aug. 9, 2004.)

Those compounds later ended up in the arms of start-up Euthymics Bioscience Inc., which acquired them for $2 million as opposed to the hefty $455 million that Merck paid six years prior. (See BioWorld Today, July 22, 2010.)