Hana Biosciences Inc., which earlier this year withdrew a new drug application filing for the antiemetic agent Zensana, licensed the product to Par Pharmaceutical Cos. Inc.

With that out of its pipeline, Hana's CEO separately disclosed a positive regulatory update regarding development of the cancer product Marqibo, which replaced Zensana as the lead drug candidate.

On the Zensana deal, Par is making a $5 million investment in Hana at $2 per share, a 25 percent premium to the 10-day average, in exchange for all rights in the U.S. and Canada. Hana also would get $1 million upon product approval and could get up to $44 million more in sales-based milestone payments. Hana made the deal following a manufacturing issue that was not going to be quickly resolved, and which led to the pulling of the NDA in March.

Zensana is in oral spray formulation of ondansetron, a 5-HT3 antagonist used to prevent nausea and vomiting resulting from chemotherapy, radiation therapy and surgery. Hana filed an NDA on the product in June 2006, but early this year identified a precipitation issue in the manufacturing process.

Hana, of South San Francisco, suffered that setback along with two others earlier this year. One related to an FDA decision not to designate special protocol assessment status to a Phase II trial of Marqibo in acute lymphocytic leukemia, and the other to toxicity issues that led to Hana suspending trials of another cancer agent, Talvesta.

Hana President and CEO Mark Ahn told BioWorld Today that Hana clarified the situation surrounding Marqibo with the FDA in June, although the company had not yet disclosed that result publicly. "We got clear guidance that the Phase II trial could serve as the basis for accelerated approval," he said. "We're very pleased with that result."

Hana had hoped to use Zensana approval as a first step into the commercial oncology area, with a plan to launch the product itself for use in cancer patients and perhaps to partner it for non-oncology indications. Ahn said the precipitation issue in manufacturing was found to be due to irregular crystallization formation resulting from an ionized sugar that was added for taste reasons.

Ahn said verification of the cause and encouraging results with a reformulated product got the program back on track, and allowed Hana to partner it with Woodcliff Lake, N.J.-based Par, which markets more than 100 generic drugs and one branded drug, the appetite stimulant Megace ES for treating the wasting conditions of anorexia and cachexia in AIDS patients.

Formulation work, bioequivalence studies and the refiling of an NDA would set back commercialization 18 to 24 months, Ahn said. That led Hana to decide to license the product out, he said, due to the size of the market and in the context of the rest of its pipeline.

Hana had gained rights to Zensana in the U.S. and Canada through a 2004 licensing deal with NovaDel Pharma Inc., of Flemington, N.J. According to a Hana filing with the SEC, Par would make a $6 million milestone payment upon product approval, with $5 million of that going to NovaDel, which also remains entitled to royalty payments.

The $44 million potential in milestone payments to Hana would be triggered by annual and cumulative sales of Zensana reaching certain levels, Ahn said. Hana also remains eligible to receive royalty payments if sales exceed certain levels.

Much of the focus at Hana now is on its Optisome Nanoparticle Technology, a liposomal platform being applied to three chemotherapy agents: Marqibo (sphingosomal vincristine), Alocrest (sphingosomal vinorelbine) and Optisomal Topotecan.

Hana acquired those products last year from Inex Oncology Inc., which earlier had received a nonapprovable letter from the FDA on Marqibo.

Along with the registration-enabling Phase II trial of Marqibo in second-relapse acute lymphoblastic leukemia, Hana is planning to initiate by the end of the year a Phase III study in first-line ALL in elderly patients.

For Alocrest, Hana intends in October to release Phase I data and initiate a Phase II program in non-small-cell lung cancer, Ahn said, while the topotecan product is on track to enter Phase I trials later this year.

The company also plans to submit an investigational new drug application by the end of the year for menadione, a small-molecule phosphatase blocker licensed last year from the Albert Einstein College of Medicine in New York. The target indication is skin rash associated with epidermal growth factor receptor inhibitor therapy.

And Hana is working on taking Talvesta (talotrexin) back into the clinic. It was in Phase I and II trials when the toxicity issued were discovered. Ahn said Hana is moving toward optimizing dosing schedules, and plans to have the product back in the clinic in 2008.

Hana, which is reporting its second-quarter numbers next week, had about $27.6 million in cash and equivalents as of March 31. Its net loss for the quarter was $8.2 million, which included $2.4 million of special charges.

Ahn said the company substantially reduced its burn rate following the Zensana setback, and expects to post a net loss of a little more than $20 million for the full year, with a "not dramatically higher" loss expected for 2008.

Ahn said Hana is funded adequately in terms of current ongoing operations, though it must address its capital needs. The deal with Par helps in that regard, but also in allowing the company to focus on its clinical programs, he said.

Hana's stock (NASDAQ:HNAB) fell 9 cents Wednesday to close at $1.45.