Washington Editor

Axcan Pharma Inc. has entered into an exclusive license and development agreement with Cellerix SL for the North American rights to Cx401, a autologous, non-embryonic stem-cell surgical-procedure product using human adipose tissue.

The product, the first based on the use of adult stem cells derived from adipose tissue of the same patient, is being developed to treat perianal fistulas in Crohn's and non-Crohn's disease.

Under the terms of the deal, Axcan, of Mont-Saint-Hilaire, Quebec, will make a $10 million up-front payment to Madrid, Spain-based Cellerix, plus regulatory milestone payments worth up to $30 million.

Axcan will pay scaled royalties based on the net sales of Cx401. Axcan also has agreed to make an equity investment of up to $5 million in Cellerix, should Cellerix complete its initial public offering within three years of the effective date of the agreement. Cellerix will continue to be responsible for development of Cx401 outside of North America.

During a conference call Tuesday, Darcy Toms, vice president of business development for Axcan, said that peak sales of Cx401 could exceed $250 million in the U.S.

Perianal fistulas - abnormal connections between the anus and rectum with other epithelia, such as skin or the vagina - affect about 85,000 Americans, Toms noted. It occurs in about 12 percent of patients with Crohn's disease, which affects about 500,000 people in the U.S.

Current therapies for fistulas in Crohn's disease patients include treatment with anti-tumor necrosis factor (TNF)-alpha, Toms noted. However, he said, anti-TNF-alpha therapy has only a 36 percent response rate in fistulas after one year, and serious adverse effects are associated with use of that product.

Surgery also is used to treat perianal fistulas in both Crohn's and non-Crohn's disease patients, Toms explained. However, he said, surgery has a high risk of anal incontinence, which "seriously compromises a patient's quality of life."

Surgery for fistulas in patients without Crohn's disease, Toms said, also has a high rate of relapse - 80 percent after 10 years. Cx401, he said, is a "minimally invasive procedure" and has "almost no risk of rejection."

The use of adipose rather than bone marrow has "higher yields and is less painful," Toms said. Cx401 also has no risk of anal incontinence, he maintained.

Results of a Phase I clinical trial of Cx401 in five patients with fistulas showed that 75 percent of fistulas did not recur after two years. Patients typically experienced relief in three weeks and were healed after eight weeks, Toms said.

The Phase I trial, he noted, was the first worldwide clinical trial to be conducted using adipose stem cells as a potential cell-based medicine. Results of a Phase II study of Cx401 and fibrin glue in 50 patients showed a 71 percent cure rate, Toms said.

Axcan expects to initiate a Phase IIb clinical trial of the product in 2008, he said. The firm anticipates filing a biologic license application for Cx401 in 2011, Toms added.

Shares of Axcan (NASDAQ:AXCA) fell 22 cents Tuesday to close at $20.61.