Coley Pharmaceutical Group Inc. expanded its pipeline beyond Toll-like receptor (TLR) 9 with the acquisition of TLR7 and TLR8 programs from technology behemoth 3M.

During an investor conference call Tuesday morning, Coley President and CEO Robert Bratzler called the deal a "natural strategic fit." In addition to giving Coley access to new TLR targets, 3M's portfolio offers clinical and preclinical small molecules that complement Coley's oligonucleotide approach.

The deal calls for Coley to make four guaranteed cash payments to 3M of $5 million each over the next three years, with the first payment due immediately. Additionally, 3M may receive regulatory milestone payments "in the ballpark of the guaranteed payment" and single-digit royalties, according to Charles Abdalian Jr., Coley's senior vice president of finance and CFO.

In exchange, Coley gets a pipeline of clinical and preclinical small molecules targeting TLR7 and TLR8, a library of approximately 10,000 small-molecule TLR7 and TLR8 agonists, and a patent estate including hundreds of issued and pending patents. Initial development will focus on cancer, but the acquired assets also may have utility in asthma, allergy, viral diseases and dermatological diseases.

The most advanced product candidate has demonstrated pharmacological activity and safety at clinically relevant doses during several Phase I/II cancer trials conducted by 3M. Coley expects to move the drug into a Phase I/II cancer trial in 2008 after transitioning the assets, assuming responsibility for the investigational new drug application, and developing a protocol. As to the specific cancer indication and route of administration, however, Coley remained mum, saying only that TLR therapeutics are applicable across a wide range of tumor types and 3M's compounds are available topically, intravenously, subcutaneously and orally.

The deal provides Wellesley, Mass.-based Coley with most - but not all - of 3M's TLR programs. 3M previously sold off most of its pharmaceutical business including the TLR7 drug Aldara (imiquimod), which now is marketed by Graceway Pharmaceuticals LLC for superficial basal cell carcinomas, actinic keratosis and genital warts. Some additional TLR fields and specific small molecules were not included in the Coley deal, but Bratzler said there was "nothing we wanted that we didn't get."

What Coley did get will help the company replenish its pipeline, much of which it has out-licensed. Pfizer Inc. holds worldwide rights in cancer to Coley's Phase III TLR9 agonist, and Sanofi-aventis Group has worldwide rights to a Phase I TLR9 asthma/allergy program. Additionally, GlaxoSmithKline plc, Novartis AG, Merck & Co. Inc. and Emergent BioSolutions Inc. each have nonexclusive licenses to the TLR9 vaccine adjuvant VaxImmune. (See BioWorld Today, March 25, 2005, and April 13, 2007.)

Coley is conducting its own clinical research on VaxImmune, but its only other unpartnered clinical program, the hepatitis C TLR9 drug Actilon, was dropped earlier this year. However, the company's preclinical pipeline shows the initial results of efforts to branch out from TLR9 agonists. Internally developed preclinical programs include TLR antagonists for autoimmune diseases as well as agonists of TLR7 and TLR8 for cancer. And Bratzler said Coley is "looking forward to independently developing" the newly acquired 3M programs. (See BioWorld Today, Jan. 24, 2007.)

TLRs, found on the surface of antigen-presenting cells in all multicellular organisms, trigger innate immune responses. As drug targets, the 10 human TLRs have generated significant interest over the past decade. TLR9 and TLR7, in particular, have been the subject of big partnerships, big potential and a few big disappointments.

In the TLR9 field, Dynavax Technologies Corp. is conducting clinical trials in hepatitis B, allergy and cancer. Initial Phase III studies in HBV sent the stock soaring, but a Phase III allergy trial was discontinued. Last year, Dynavax inked a potential $136 million deal with AstraZeneca plc for the development of TLR9 agonists to treat asthma and chronic obstructive pulmonary disease (COPD). (See BioWorld Today, Sept. 8, 2006, Nov. 30, 2006, and Jan. 9, 2007.)

Also working in TLR9 is Hybridon Inc., which signed a $136 million deal with Novartis for TLR9 asthma and allergy drugs. (See BioWorld Today, June 2, 2005.)

In TLR7, Anadys Pharmaceuticals Inc. gained recognition for its potential $570 million deal with Novartis Pharma AG for ANA975 and other TLR7 hepatitis drugs. Yet Anadys later had to suspend dosing of ANA975 in HCV. (See BioWorld Today, June 3, 2005, and June 27, 2006.)

TLR8 has seen far less action to date. Idera Pharmaceuticals Inc.'s $455 million deal with Merck & Co. Inc. included agonists for TLRs 7, 8 and 9. Additionally, start-up VentiRx Pharmaceuticals Inc. licensed a preclinical TLR program from Array BioPharma Inc. that included small-molecule TLR8 agonists. (See BioWorld Today, Dec. 12, 2006, and March 14, 2007.)

As a result of acquiring 3M's TLR programs, Coley amended its 2007 guidance, projecting a full-year net loss of $45 million to $49 million and R&D expenses of approximately $59 million. Cash burn guidance remained unchanged at between $35 million and $39 million, leaving a projected $72 million in cash and investments at the end of 2007.

Shares of Coley (NASDAQ:COLY) traded up 7 cents to close at $8.12 on Tuesday.

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