Seattle-based Cell Therapeutics Inc. nabbed worldwide rights to Phase III-ready JAK2 inhibitor pacritinib from S*Bio Pte Ltd., of Singapore, for a relatively modest up-front payment of $30 million – half of that in convertible preferred stock – and up to $132.5 million in regulatory and sales milestones if the drug lives up to its full potential.

Cell Therapeutics' CEO, James Bianco, called the deal "a really smart pick-up," and investors might be hard-pressed to disagree.

After all, the JAK inhibitor space has generated substantial buzz in the past few years, with big pharma players such as Novartis AG and Sanofi SA getting into the game. Novartis-partnered Jakafi (ruxolitinib), developed by Wilmington, Del.-based Incyte Corp., became the first JAK inhibitor to gain approval, with late last year's FDA nod in myelofibrosis. (See BioWorld Today, Nov. 17, 2011.)

And pacritinib has demonstrated some pretty promising data in its own right. At the American Society of Hematology meeting in December 2011, S*Bio reported Phase II results showing the drug reduced splenomegaly in myelofibrosis patients, while having a minimal impact on existing cytopenia, a risk that has been associated with other JAK candidates, including Jakafi.

In 2009, S*Bio's JAK program caught the attention of Onyx Pharmaceuticals Inc., which inked an option deal that could have translated into as much as $550 million for S*Bio. But the South San Francisco-based biotech, which has been putting much of its resources into multiple myeloma candidate carfilzomib, let the program go last year following a pipeline reprioritization. (See BioWorld Today, May 5, 2011.)

Bianco declined to speculate on the conference call why Onyx passed on the program, though he did point out that Jakafi was heading toward FDA approval at that time, and Onyx executives could have been worried about competition. But, he pointed out, Onyx's participation in pacritinib's early development means that drug has had "essentially big pharma investment" behind it.

More than $100 million has been invested to bring pacritinib to Phase III, Bianco added.

That makes the terms of the latest S*Bio deal sound even more favorable for Cell Therapeutics. By comparison, Onyx had shelled out $25 million in cash just for an option to license the JAK program. Basel, Switzerland-based Novartis paid a whopping $150 million up front in 2009 in an ex-U.S. agreement for Jakafi – the entire deal could be worth up to $1 billion – while Paris-based Sanofi SA acquired TargeGen Inc. in 2010 for $75 million up front and up to $485 million tied to development of JAK2 inhibitor SAR302503, now in Phase III development. (See BioWorld Today, Nov. 30, 2009, and July 1, 2010.)

The S*Bio deal for pacritinib, however, does raise questions on the prospective partnering terms for an earlier-stage JAK1/JAK2 inhibitor, CYT387, in development by small Canadian biotech YM Biosciences Inc. So far, YM has developed the drug on its own, recently taking advantage of stock increases to pad its coffers with a $70 million public offering. (See BioWorld Today, Feb. 27, 2012.)

Bianco said there were other firms vying for S*Bio's pacritinib. "I don't know how many," he said. "It certainly wasn't [that] we were the only ones that came to the party."

But Cell Therapeutics isn't worried about competition for JAK inhibitors in myelofibrosis. Bianco pointed out that myeloproliferative neoplasms, which include myelofibrosis, polycythemia and thrombocythemia, comprise a $7 billion-per-year market in the U.S alone, with the majority of those diseases involving JAK mutations. "So clearly we saw this as a market that will support multiple JAK2 inhibitors," he said, though differentiation will be key.

YM, for instance, highlighted CYT387's positive effects on cytopenia – specifically anemia – when reporting positive Phase I/II data late last year. That could set it apart from Jakafi, which has shown a negative effect on anemia in clinical studies to date.

For pacritinib, the advantage could come from its selectivity. Jakafi and CYT387 inhibit both JAK1 and JAK2, but Sanofi's SAR302503 and pacritinib both are designed to be selective to JAK2. Pacritinib also hits both wild-type mutation and clonal mutation V617F, and it has dual activity against FLT3 mutation, which could extend its potential into other blood cancers such as acute myeloid leukemia and certain lymphomas, Bianco said.

Initially, Cell Therapeutics plans to position the drug in myelofibrosis patients with thrombocytopenia, or low platelet counts. About 37 percent of the estimated 25,000 to 30,000 myelofibrosis patients have low platelet counts, the company said.

So far, data have shown no hematopoietic suppression with pacritinib, Bianco explained. Treatment with most of the JAK inhibitors in development is limited to patients with platelet counts of 50,000 or higher. Jakafi treatment is limited to a 100,000-or-higher platelet count. But, for pacritinib, "there's no platelet cut-off," he added.

Plans for two 250-patient Phase III trials are in the works – one testing pacritinib against placebo and one testing the drug against low-dose Jakafi – and could get under way as early as the fourth quarter. There's currently no special protocol assessment (SPA) in place, but Bianco said S*Bio went through the SPA process with the FDA, "so we clearly know the direction."

He estimated a two-year time frame, once the studies were up and running.

Cell Therapeutics is hoping that potential revenue from sales of Pixuvri (pixantrone) could offset some the pacritinib trial costs.

The drug received a positive opinion from the European Committee for Medicinal Products for Human Use in February and full European Commission approval is expected shortly.

Elsewhere in its pipeline, the company has another Phase III-stage asset, tosedostat, which it picked up through a co-development deal with Oxford, UK-based Chroma Therapeutics Ltd. last year. (See BioWorld Today, March 15, 2011.)

Under the terms of its deal with S*Bio, Cell Therapeutics has 18 months to either partner or start a trial on its own in Asia, or see Asian rights revert to S*Bio. In addition to the up-front and milestone payments, S*Bio also would be entitled to a sliding-scale, low-single-digit royalties on any sales of pacritinib.