Assistant Managing Editor

Maxygen Inc. landed a big pharma partner for its early stage hemophilia candidate, MAXY-VII, signing a licensing deal with Bayer HealthCare in exchange for $90 million in cash up front and potentially $30 million more in milestones down the road.

That deal came more than a year after F. Hoffmann-La Roche Ltd. backed out of a collaboration to develop MAXY-VII, a Factor VIIa protein, in trauma indications due to an inadequate animal model and overall trepidation in the Factor VII market stemming from safety issues and the fact that top-selling hemophilia Factor VII compound NovoSeven from Novo Nordisk A/S failed in a Phase III trial to treat intracerebral hemorrhage. (See BioWorld Today, March 15, 2007.)

Following Roche's withdrawal, Redwood City, Calif.-based Maxygen switched gears, opting to develop the drug for hemophilia rather than trauma, a move that helped the firm secure a "really excellent partnership" with Bayer, Maxygen CEO Russell Howard told investors in a conference call.

Under the terms, Bayer, of Leverkusen, Germany, agreed to take on all further development of MAXY-VII and will owe up to $30 million in milestone payments to Maxygen upon the start of Phase II studies and the achievement of certain patent conditions. Though a few analysts on the call raised concerns about the lack of any back-end royalty payments or late-stage milestones, Howard maintained that Maxygen was looking for "short- to mid-term" impact for investors and opted for a healthy initial cash infusion that would help the firm shift its focus to the autoimmune space.

"We decided not to focus on the field of hematology," he said, calling it a "niche market with few players." Instead, the company will look to build a pipeline of autoimmune drugs, an area in which "we believe we're very competitive." And, in the meantime, "we need cash in order to run both our internal programs and to potentially gain external [clinical] programs."

The deal made sense to Wall Street, which sent shares of Maxygen (NASDAQ:MAXY) climbing 27.6 percent, or 97 cents, on the news to close Wednesday at $4.48.

A preclinical compound, MAXY-VII is set to enter Phase I testing this quarter. The drug, a next-generation recombinant Factor VIIa protein is aimed at hemophilia, specifically the 20 percent to 30 percent of hemophilia patients who have developed antibodies, or inhibitors, to existing therapies. Factor VIIa is designed to bypass inhibitors and allow the formation of clots, and Maxygen said MAXY-VII could offer a better safety profile and more convenient dosing regimen to NovoSeven.

The deal also transfers Maxygen's other hematology assets to Bayer, including very early Factor VIII and Factor IX programs.

Bayer also gains access to Maxygen's MolecularBreeding technology, a gene shuffling platform to screen proteins for targeted drug properties, plus exclusive rights to use that technology for 30 specified gene targets.

The deal "validates the value of [the company's] gene shuffling platform," analyst Eric Schmidt, of Cowen and Co., wrote in a research note, adding that it also "alleviates the need for any . . . financing" and should "allow the company to continue moving other products forward."

With the $90 million up front, plus the company's existing cash - $133.6 million as of March 31 - Maxygen now has "more strategic flexibility" to determine how to grow its autoimmune portfolio, Howard said, possibly boosting internal investment in its MAXY-4 candidate, a program that has yielded some "exciting preclinical results" so far, and which might have potential in rheumatoid arthritis and in preventing transplant rejection.

MAXY-4 is the "centerpiece" of the company's budding autoimmune program, he added. "We may look at partnering [that product] or not partnering, [but] if we look at partnering, clearly we have the cash to co-develop."

Maxygen has other autoimmune programs in the research stage, though Howard said the firm has not yet publicly disclosed those targets. The firm also plans seek clinical-stage assets, "so we're looking at in-licensing, mergers and acquisitions and other ways we can build that" autoimmune portfolio, he said.

The company plans to seek a partner for its MAXY-G34, its granulocyte-colony stimulating factor aimed at the neutropenia market currently dominated by Neupogen and Neulasta from Thousand Oaks, Calif.-based Amgen Inc. Worldwide combined sales of those drugs totaled $4.3 billion in 2007.

The Phase II trial of MAXY-G34 "remains on track," Howard said, adding that the company's goal is to have a partner in place for that product by the end of the first half of 2009.

Altea, Hospira in Potential $109M Deal

Specialty pharma firm Altea Therapeutics Inc. entered a deal with Hospira Inc. to develop and commercialize an undisclosed product using Altea's PassPort transdermal delivery system in a deal worth up to $109 million.

Under the terms, Atlanta-based Altea granted Hospira, of Lake Forest, Ill., exclusive worldwide rights to the product. Altea agreed to fund certain Phase I studies, after which Hospira will take over further development, manufacturing and commercialization activities, and Altea stands to receive an undisclosed up-front payment, which includes an equity investment.

Beyond that, the company could get clinical, regulatory, commercialization and sales performance milestones of up to $109 million, plus royalties on product sales during the term of the agreement.

Altea's technology involves the use of a transdermal patch to deliver therapeutic levels of water-soluble small drugs, therapeutic proteins, carbohydrates and vaccines through the skin.

Addrenex Signs Second Sciele Deal

Durham, N.C.-based Addrenex Pharmaceuticals Inc. licensed rights to a compound for hypertension and other indications to Sciele Pharma Inc. for up to $27 million in development and regulatory milestone payments and future royalty payments on product sales.

Under the terms, Atlanta-based Sciele will take over all development costs and the companies will co-develop the product, which emerged from Addrenex's pipeline of drugs aimed at regulating adrenergic excess. The approach is based on the discovery that adrenalin, a well-known hormone that's triggered in response in stress or danger, along with its counterpart, noradrenalin, helps regulate physiologic functions ranging from blood pressure to thermostatic control.

Last year, Addrenex partnered late-stage products Clonicel for attention deficit hyperactivity disorder and CloniBID for hypertension, with Sciele for $6 million in up-front equity, $11 million in milestones and royalties on product sales. Clonicel recently completed enrollment in a Phase III study, and a new drug application for CloniBID is under FDA review.

Cubist, AZ in Merrem Promotion Deal

Cubist Pharmaceuticals Inc. could receive $20 million in annual revenue under its deal with London-based AstraZeneca plc to promote and support AstraZeneca's Merrem I.V. (meropenem) broad-spectrum antibiotic using its U.S. acute care sales force.

That deal establishes a baseline of $20 million in yearly revenue, which will be adjusted based on actual Merrem sales. Additional terms of the agreement were not disclosed.

Lexington, Mass.-based Cubist said the product is an "excellent fit" with its existing marketed antibiotic, Cubicin, which is approved to treat Gram-positive infections.

Shares of Cubist (NASDAQ:CBST) gained 76 cents Wednesday, to close at $19.04.

Encore, PainReform in Pain Collaboration

Encore Therapeutics Inc. licensed rights to its preclinical ETI-211 product for postsurgical pain to PainReform, a Tel Aviv, Israel-based specialty pharmaceutical firm.

Specific terms were not disclosed, but Encore, of Carlsbad, Calif., will receive an up-front payment, as well as development and sales milestones and royalties on product sales. In exchange, PainReform gains exclusive North American rights to the product, which is administered subdermally using Encore's Phospholipid Gel technology, and retains an option to expand the deal to include other countries, such as Japan and the European Union.

PainReform also will assume further development costs of the drug, which is designed to provide a subdermal depot for Ropivacaine, a long-acting local anesthetic, which releases the drug to the surgical wound for a period of three to four days.