BioWorld International Correspondent

LONDON - After a long hunt, Alizyme plc sealed its first U.S. commercialization deal, granting rights for its ulcerative colitis treatment Colal-pred to Prometheus Laboratories, of San Diego.

"We're off to the races," CEO Tim McCarthy told an analysts' meeting. He added that accepting a measly $2.5 million down payment followed by $15 million in milestones up to filing in 2011 is a strategic decision. "We were keen to back-end load this deal. We could have gone for bigger milestones, but are more interested in the medium to long term."

Royalty rates are in the double digits and will increase as sales levels increase. The deal did not impress the market, and shares in the Cambridge, UK-based company fell 3.5 percent to 75 pence when the deal was announced Dec. 3.

McCarty stepped up from CFO to CEO a year ago when Alizyme's founding CEO Richard Palmer left after failing to deliver a deal for another product, Cetilistat, a lipase inhibitor for treating obesity and Type II diabetes.

At that time, the company went back to investors to raise £14.5 million (then US$28.7 million) to accelerate commercialization efforts behind its three Phase III gastrointestinal products.

McCarthy promised the first license for Colal-pred will be followed shortly by several others. "There is a lot going on in the background. There are more deals to come," he said. The combination of licensing agreements and clinical trial results will create "a rich vein of news flow" in 2008.

Prometheus will now pick up the U.S. development of Colal-pred at an expected cost of $40 million to $50 million, and is due to start Phase II early in 2008. The product, a marketed steroid formulated not to release its anti-inflammatory payload until it reaches the colon and thus avoiding the usual side effects of this class of drugs, is in Phase III in Europe with headline results due in the first half of next year.

The deal has taken a while to brew, with negotiations dating back to January. McCarthy said it is a sign of Prometheus' faith in the product that it is going ahead with Phase II in advance of the results from the European Phase III.

"We put the [U.S.] development plan together with Prometheus; they have been very proactive," McCarthy said. "We started talking to them in January, but they also worked in good faith to give us advice on U.S. regulatory requirements."

Although Prometheus is not well known in Europe, McCarthy noted the company has a growing reputation in the U.S. Its background is in providing laboratory diagnostic services for gastrointestinal diseases. "What they offer gastroenterologists is that they take a sample, FedEx it and 24 hours later get a diagnosis."

Prometheus is now building on this by in-licensing treatments for the diseases it diagnoses. Since taking on AstraZeneca's Endocort for treating Crohn's disease, it has grown the U.S. market from $30 million to $90 million. More recently, it acquired Lotronex for treating irritable bowel syndrome (IBS) from GlaxoSmithKline plc.

That approach of selling drugs alongside diagnostic tests makes Prometheus a perfect fit, McCarthy said. "We weren't interested in the largest partner, we were interested in the most effective partner."

McCarthy refused to say whether Prometheus is interested also in licensing Alizyme's IBS treatment Renzapride, which is in a Phase III U.S. study. "I can't comment. They are obviously interested in IBS, but so are other people."

He hinted that he will soon deliver a deal for Cetilistat. The drug is ready for Phase III but the route agreed upon with the FDA will involve 4,000 people in three studies over 12 months, and Alizyme cannot afford that.