BioWorld International Correspondent

Scil Technology GmbH could earn as much as $250 million in up-front and milestone payments from Pfizer Inc. by out-licensing rights to cartilage-derived retinoic acid sensitive protein (CD-RAP), a growth factor preferentially expressed in cartilage tissue.

Further financial terms were not disclosed, but Martinsreid, Germany-based Scil Technology also would receive royalties on product sales.

The sales potential is substantial, since Scil Technology is positioning CD-Rap - also known as Melanoma Inhibitory Activity (MIA) - as a drug treatment for osteoarthritis, a major underserved indication.

"If it works - and we have good data indicating it does work - it's really the first treatment of that disease," said Volker Lang, Scil vice president of corporate development.

"The general agreement is that this is a large market opportunity for a product that works," he said. "Anything that comes through should be a blockbuster."

Current therapies include anti-inflammatory drugs and painkillers, Scil CEO Weishui Weiser said, but none tackles the underlying disease mechanism. Although it has an inflammatory component, osteoarthritis arises mainly through wear and tear of the cartilage in weight-bearing joints, she said.

"Essentially, almost everyone gets it with age. The question is how severe is the disease and when do you initiate treatment," Lang said. Those who are most badly affected undergo joint replacement surgery.

CD-Rap is an 11-kiloDalton secreted protein, which, according to a paper published in the January 2006 issue of Experimental Cell Research by Scil scientists, appears to play a role in influencing the differentiation of Mesenchymal stem cells into chondrocytes, the cells that produce and maintain the cartilaginous matrix present in the joints.

The company has obtained proof-of-concept data supporting its potential clinical role in animal models of osteoarthritis. "In the animal model, it induced cartilage repair," Weiser said.

New York-based Pfizer now will take on responsibility for further preclinical and clinical development of CD-Rap. The deal represents Scil's first major out-licensing agreement. The nature of the indication motivated its timing. "It's the size of the indication," Lang said. "It's the complexity of the clinical trials."

Diagnostic rights to the protein are held by Roche Diagnostics GmbH, a subsidiary of Basel, Switzerland-based F. Hoffmann-La Roche Ltd. Scil obtained rights to its therapeutic patents in 2005.

Scil Technology is a member of a group of six life sciences firms owned by Munich, Germany-based BioNet Holding GmbH, an entity set up in 1997 by the late Stefan Engelhorn, a member of the family that had established and owned Boehringer Mannheim Group. (Roche acquired Boehringer Mannheim in the same year in a deal valued at about $11 billion.)

Scil, which has 35 employees, was established in 2003 to develop bone and cartilage regeneration therapies based on combining proprietary recombinant human growth factors with biomaterials.

The rest of its pipeline is unpartnered. Its lead therapy, MD05, which is based on the growth and differentiation Factor 5 (rhGDF-5), a growth factor undergoing separate Phase II clinical trials in dental implantology and severe periodontal disease. MD06, based on the same growth factor, is in preclinical development as a dental implant treatment. MD08, also based on rhGDF-5, is in development as an injectable paste for treating periodontal disease. ST01 is a bone substitute material incorporating the growth factor bone morphogenetic protein.

It is in preclinical development for use during spinal fusion surgical procedures, following degenerative disc disease.