West Coast Editor

AVI BioPharma Inc.'s new deal with Ercole Biotech Inc. to team exon-skipping technology with the latter's Splice Switching Oligonucleotide approach readies the pair to enter the clinic against Duchenne muscular dystrophy - an indication where PTC Therapeutics Inc. has Phase II trials in progress, and Prosensa BV also is making headway.

"Ultimately, we may or may not be competing for some of the same patients [in DMD]," said Ray Cummings, vice president of business development for Portland, Ore.-based AVI, noting that DMD can manifest through any one of a "stunning complicated" set of mutations.

The cross-licensing and collaboration pact, which includes DMD and beta thalassemia, calls for AVI to lead the former program and Ercole the latter.

AVI will issue Ercole an undisclosed number of common shares and Ercole will provide AVI with shares of its Series A-2 preferred stock. Each firm has the option of co-funding the push led by the other and sharing in financial returns.

AVI brings to the table Exon Skipping Pre-RNA Interference Technology (ESPRIT), and Ercole has the SSO platform to redirect mRNA splicing. Morpholino chemistry deployed by AVI should help modify splicing, since oligonucleotides based on this chemistry do not degrade target RNA or lead to down-regulation of the target gene.

In December, AVI started an investigator-sponsored, proof-of-concept, controlled, dose-escalating trial testing ESPRIT for DMD, in collaboration with a UK-based consortium. Up to nine young boys with DMD were to get a single dose of AVI-4658, which targets exon 51.

The endpoint is muscle dystrophin, and data are expected by the middle of this year. "It's the first clinical application of exon skipping," Cummings said. Other areas where the approach might prove useful include Type 1 diabetes.

The latest deal is the second deal between AVI and Ercole, of Research Triangle Park, N.C., which inked an unrelated agreement, also in December, that covers undisclosed therapeutic targets.

DMD is the most common form of muscular dystrophy, hitting one in 3,500 boys and young men, with about 17,000 afflicted in the U.S. Women can be carriers but typically don't show symptoms.

Beta thalassemia, caused by a defect in the beta hemoglobin gene, is one of the more common genetic diseases worldwide, occurring in about one in 800 births in Asia (but only one in 40,000 in the U.S.). Untreated, patients end up with anemia, bone deformities and debilitating enlargement of the spleen and liver. They die in their teens or 20s, and therapy so far is limited to blood transfusions, iron chelation therapy and bone marrow transplants.

Which will be the more lucrative indication is hard to determine. "There certainly are more thalassemia patients worldwide, but a lot of them are in countries where they would have difficulty paying for a high-tech therapeutic approach," Cummings said.

PTC, of South Plainfield, N.J., has PTC124 in separate Phase II clinical trials for the treatment of DMD and cystic fibrosis. The compound targets "nonsense" mutations, in which a mutation changes a protein's DNA sequence to include an early stop codon, leaving the protein unfinished.

Phase II data last year showed PTC124 restored function of the CF transmembrane conductance regulator protein in airway cells and knocked down blood neutrophil counts. (See BioWorld Today, April 24, 2007.)

"Some DMD patients have that type of single-point mutation, and some have larger deletions," Cummings said, and AVI's method deals with the second variety.

Last month, Prosensa, of Leiden, the Netherlands, entered a deal with Amsterdam, the Netherlands-based SynCo Bio Partners to formulate and fill Prosensa's RNA-based compound for DMD, which Cummings said is "a little bit ahead" of AVI's in development.

AVI and Ercole will decide jointly how to commercialize any products that emerge from their partnership. "We have some options available to us, and they divide along the two indications," Cummings said. "We could conceivably take [a compound for DMD] all the way to the market ourselves, at least in the U.S.," but a marketing partner likely would be required in the more diffuse market overseas, he said.

Shares of AVI (NASDAQ:AVII) closed Wednesday at $2.74, up 10 cents.