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"It's been a busy morning," said Markus Cappel, vice president of corporate and business development for ChemoCentryx Inc., which found itself the target of phone queries last Monday as a result of the potential $803 million research and licensing deal signed by Incyte Corp. with Pfizer Inc.

The afternoon probably was, too.

Pfizer is getting exclusive worldwide development and commercialization rights to Incyte's oral CCR2 antagonists. The program has yielded separate Phase IIa studies against rheumatoid arthritis and obesity in patients resistant to insulin. Excluded from the deal are preclinical CCR2 compounds against multiple sclerosis and another that is undisclosed, which will be advanced from the preclinical stage by Incyte.

Pfizer has agreed to provide research funds, paying $40 million up front and buying $20 million in convertible subordinated notes, with $10 million issued within 20 days after the effective date of the deal and another $10 million after Incyte files an investigational new drug application in one of the retained indications. The notes carry no interest and will be convertible into Incyte stock at premium. Milestone payments could mean as much as $743 million more for Incyte.

"Players who lost out trying to negotiate with Incyte are looking at [others in] the space," Cappel told BioWorld Financial Watch - and those others include ChemoCentryx, which has an oral CCR2 antagonist not yet partnered that is expected to start Phase I trials by the end of this year.

Millennium Pharmaceuticals Inc. this summer began a 110-patient Phase II trial with its CCR2 blocker, the monoclonal antibody known as MLN1202, in patients at risk for atherosclerotic cardiovascular disease (an area that Pfizer likely will go after, as well), and another Phase II trial with the compound in about 40 patients with relapsing-remitting MS.

Merck & Co. Inc. also has a CCR2 antagonist at the Phase II stage, said Steven Harr of Morgan Stanley, who called the Incyte deal with Pfizer a "clear positive" for the biotech firm, but added that "we need to have a better understanding of the market potential of these compounds and the economics for Incyte," such as the royalty rate, in order to determine the longer-term value.

Paul Friedman, president and CEO of Incyte, told investors during a conference call that he could not disclose royalties but deemed them "fully appropriate for the stage of the program and pretty favorable for Incyte."

Harr wrote in a research note that Pfizer "must have had an early look at the [RA] data expected this quarter, which bodes well for this indication," but whether investors will get a similar peek is uncertain. Friedman said the two firms "have not definitively decided where we're going to go with the respect to the Phase IIa studies" in RA, and Pfizer might decide not to disclose the results for competitive reasons. Data from the trials in obese patients could be made available in the first quarter of next year, Harr wrote.

Meanwhile, analysts at Morgan Stanley "expect the stock to trade up significantly," between $7 and $8, but shares will "be range-bound until there is better visibility on timelines for development." News of the Pfizer deal pushed Incyte's stock up $1.06, or about 20 percent, to close at $5.86 on Nov. 21.

In early 2004, Incyte morphed from a genomics firm into a drug development concern, shutting down its California facilities and cutting 57 percent of its work force (257 jobs), thus saving about $50 million in annual operating expenses. From the CCR2 program came one of the company's first two internally developed candidates. The second is an oral sheddase inhibitor for solid tumors, INCB7839, which entered a Phase I study in April.

Sheddase is an enzymatic activity attributed to the ADAM family of proteins, shown to play a role in controlling the growth and spread of cancers regulated by epidermal growth factor receptor.

Much further along in the Incyte pipeline is Reverset, the oral, once-daily nucleoside analogue reverse transcriptase inhibitor licensed in September 2003 from Pharmasset Ltd., which was spun out of Emory University in Atlanta. Incyte has full development, manufacturing and marketing rights in the U.S., Europe and other unnamed areas. Also called dexelvucitabine, or DFC, Reverset suffered a setback in September on word that the FDA wants a confirmatory Phase II study before the compound can move into Phase III trials.

CCR2 inhibitors, though, took center stage last week. After the Incyte/Pfizer news came word of ChemoCentryx's IND for its CCR2 inhibitor.

"I think the most promising indication [for compounds targeting CCR2], when we talk to members of our scientific advisory board, is certainly MS," Cappel said. RA looks like a good possibility, too, along with "surprisingly, Type II diabetes," he said. And, of course, there's atherosclerosis.

Cardiovascular indications demand large studies, and Cappel pointed out that Incyte "needed somebody [such as Pfizer] with a very strong primary care sales force and deep pockets to run those trials." Some CCR2 antagonists might be used with stents, he added.

ChemoCentryx also has done work with the CCR1 receptor, and preclinical research netted the firm a licensing deal in March 2004 with Forest Laboratories Inc., which agreed to provide funding for a joint research program for up to three years. CCR1 has been validated in both preclinical and animal models of arthritis.

Next in line for a partnership could be ChemoCentryx's CCR2 program especially given the buzz created by Pfizer's deal with Incyte, which "got some pretty good financials," Cappel remarked. "I'd take $40 million up front."

Whether his company will do that well or better might soon be known, as would-be Incyte suitors shop for other opportunities in CCR2.

"Stay tuned," he said.