Staff Writer

With big pharma deals in place for its two lead compounds, Transition Therapeutics Inc. replenished its pipeline by acquiring three early stage programs from Forbes Medi-Tech Inc.

Toronto-based Transition will pay Vancouver, British Columbia-based Forbes Medi-Tech $1 million in cash up front as well as up to $2 million in cash or stock milestone payments associated with each of the three programs, for a total deal value of $7 million.

"It is a good deal," Transition CEO Tony Cruz told BioWorld Today. He added that the milestone payments are back-end loaded, extending through regulatory approval.

However, Cruz noted that all three programs are early stage, which means Transition is "taking a bit of a risk."

Most advanced is a series of VPAC2 agonists for diabetes and inflammatory diseases. Cruz said the peptides have shown the potential in animal studies to stimulate insulin secretion and suppress inflammatory responses, and Transition plans to advance programs in parallel for both diabetes and asthma. The first compound from the series is expected to start preclinical development within three to six months.

In addition to the VPAC2 program, Transition acquired programs evaluating small-molecule acetyl-CoA carboxylase 2 (ACC2) inhibitors for diabetes and obesity and serine palmitoyltransferase (SPT) inhibitors for inflammation.

Cruz said Forbes Medi-Tech has made "significant advances" in the programs since acquiring them from Therapei Pharmaceuticals Inc. in 2006. Therapei was spun off of diagnostics company Sequenom Inc., and Forbes Medi-Tech bought the spinout for an undisclosed up-front payment and milestones not to exceed $50 million. (See BioWorld Today, Oct. 26, 2006.)

As part of the Therapei acquisition, Forbes Medi-Tech gained a San Diego office led by Therapei's founder John Nester. The San Diego office now will become a U.S. subsidiary of Transition, and Nester will serve as vice president of drug discovery.

Forbes Medi-Tech will pay Therapei shareholders 20 percent of all proceeds associated with the sale of its pharmaceutical assets.

The new programs will bolster Transition's pipeline, providing the company with early stage fodder to focus on now that its lead programs have been partnered.

In 2006, Transition signed a deal worth up to $200 million with Elan Corp. plc, of Dublin, Ireland, for the development of ELND-005 (AZD-103), a small molecule for Alzheimer's disease. Transition had acquired the drug from Ellipsis Neurotherapeutics Inc., and Elan now is advancing it through Phase II trials. (See BioWorld Today, Sept. 28, 2006.)

Elan shares took a beating recently, thanks to less-than-stellar Phase II data with the Alzheimer's disease antibody bapineuzumab followed by two new cases of PML linked to multiple sclerosis drug Tysabri (natalizumab). Shares of Transition took a sympathy dive, given the Alzheimer's connection, but Cruz reiterated that ELND-005 is moving forward just fine.

Earlier this year, Transition inked a deal worth up to $137 million with Eli Lilly and Co. for the diabetes drug TT-223. The deal calls for Transition to run a monotherapy trial of the drug, which Cruz said is "expected to begin imminently." Meanwhile, Indianapolis-based Lilly plans to start a trial next year in combination with a glucagon-like peptide 1 (GLP-1) drug. (See BioWorld Today, March 17, 2008.)

Cruz said the newly acquired programs will follow in the footsteps of ELND-005 and TT-223. Transition will seek to partner them in 18-24 months. Transition also is advancing an early stage neuroprotectant program it gained last year through the acquisition of NeuroMedix Inc.

For Forbes Medi-Tech, the sale of its pharmaceutical assets leaves the company free to concentrate on its nutraceutical business, which is led by cholesterol-lowering compound Reducol.

The company's drug development efforts took a hit in 2006 when cholesterol-lowering drug FM-VP4 failed a Phase II trial, and earlier this year, Forbes Medi-Tech restructured and decided to scrap drug development altogether. (See BioWorld Today, Dec. 5, 2006.)

Shares of Transition (NASDAQ:TTHI) rose 3 cents to close at $8.91 on Monday, while shares of Forbes Medi-Tech (NASDAQ: FMTI) closed flat at 91 cents.