Washington Editor

GTx Inc. has partnered with Merck and Co. Inc. in a deal worth at least $500 million to develop and commercialize selective androgen receptor modulators (SARMs), a new class of drugs that target musculoskeletal conditions, such as age-related muscle loss.

The collaboration includes GTx's Ostarine, which is currently being tested as a treatment for cancer cachexia, a debilitating, progressive muscle-wasting condition characterized by unintentional weight loss, muscle weakness, anemia, fatigue and death. The condition affects about 50 percent of patients with cancer.

The Ostarine cancer cachexia trial is a Phase IIb randomized, double-blind, placebo-controlled study in 150 patients with non-small-cell lung or colorectal cancer, non-Hodgkin's lymphoma or chronic lymphocytic leukemia.

The trial is being conducted at about 40 centers in the U.S. and Argentina, said GTx CEO Mitchell S. Steiner. The firm expects to have data from the Phase IIb trial by summer 2008, he told BioWorld Today.

In a Phase II proof-of-concept clinical trial of 120 patients, Ostarine demonstrated the ability to build lean body mass, or muscle, Steiner noted.

Under the deal announced Tuesday, GTx and Merck will pool their respective SARM programs and partner to discover, develop and commercialize current and future molecules. Steiner called that type of collaboration where both firms have equal access to each others data "unique."

"A lot of times big pharma won't do that," he said. "It's a very different model. Whether it's our compound, theirs or both, we are going to have access. This collaboration is based purely on the science of it."

By combining their respective programs, "Merck believes that both companies are optimally positioned to capture the potential of the SARM class," Ian R. McConnell, spokesman for the Whitehouse Station, N.J.-based pharmaceutical maker, told BioWorld Today.

The agreement calls for Merck to cover all future costs associated with ongoing development and, if approved, commercialization of Ostarine and other investigational SARM products resulting from the alliance.

Under the deal, Memphis, Tenn.-based GTx will receive an up-front payment of $40 million plus $15 million in research reimbursements to be paid over the initial three years of the partnership.

GTx also could bank up to $422 million in future milestone payments if a SARM drug candidate is approved for multiple indications.

The Tennessee biotech could garner additional milestone payments if other SARM drugs achieve approval. In addition, GTx will receive royalties on any resulting worldwide product revenue.

Details of the royalties were not disclosed, but, Steiner said they are "commensurate with large product opportunity."

Under the agreement, Merck also will make an equity investment of $30 million in GTx common stock at a 40 percent premium to the 30-day average closing price, which, Steiner said, shows that the large pharmaceutical firm is willing to "put some skin in the game."

Several big pharma companies showed interest in partnering with GTx on developing and commercializing SARMs, Steiner said, noting that with an aging baby boomer population, drugs to treat muscle loss and other musculoskeletal conditions will be in greater demand.

"It's a big market," he declared.

GTx chose Merck for the SARM collaboration, Steiner said, because of the pharmaceutical firm's scientific experience, ability and vision in developing the molecules. "They understand the space," he said, adding that Merck not only brings "smarts to the table" about SARMs but a "can-do winning spirit."

Merck's McConnell said that because of his company's policy not to disclose any information about clinical trials earlier than Phase IIb, he could not provide any information about SARM research his firm has conducted.

But, Steiner said, Merck is "clearly a player" in the SARM space. "They get it," he said.

GTx is planning to soon initiate a Phase IIb clinical trial of Ostarine to treat muscle wasting related to chronic kidney disease.

In addition to SARMs, the biotech is developing selective estrogen receptor modulators (SERMs). GTx's lead SERM product Acapodene (toremifene citrate) is being tested to treat serious adverse effects related to androgen deprivation therapy for advanced prostate cancer and as a preventive therapy for prostate cancer in high-risk men with high-grade prostatic intraepithelial neoplasia.

The company has licensed the European development and commercialization rights for Acapodene to UK-based Ipsen Ltd.

GTx's product pipeline also includes GTx-878, an estrogen receptor beta agonist for the treatment of benign prostatic hyperplasia and chronic prostatitis. The company said it is planning to initiate human clinical studies for GTx-878 in 2009.

Shares of GTx (NASDAQ:GTXI) rose $1.90 Tuesday to close at $16.34.