Coley Pharmaceutical Group Inc. will get $4 million up front and stands to receive up to $33 million in potential milestones as part of a licensing deal that gives Merck & Co. Inc. rights to VaxImmune, an adjuvant technology, for use in developing vaccines for infectious diseases and Alzheimer's.

Under the terms, Coley also would receive royalties on any product sales from the collaboration. In exchange, Merck holds nonexclusive rights to the technology for certain infectious disease fields and Alzheimer's disease, and retains an option to add additional disease areas in the future. The deal is similar to earlier agreements Coley signed with companies such as GlaxoSmithKline plc and Novartis AG.

"We really have a 'Who's Who' list of partners," said Robert Bratzler, Coley's president and CEO, a fact that's not surprising, given the Wellesley, Mass.-based firm's focus on developing products based on Toll-like receptors (TLRs), an area that has gained the attention of big pharma over the last couple of years.

Just in the last seven months, the space has seen two large collaborations. In December, Coley's new partner, Whitehouse Station, N.J.-based Merck, signed a potential $455 million deal with Idera Pharmaceuticals Inc. for broad use of Idera's TLR agonists. And three months earlier, London-based AstraZeneca plc agreed to pay up to $136 million for rights to a preclinical TLR program targeting asthma and chronic obstructive pulmonary disorder from Berkeley, Calif.-based Dynavax Technologies Corp. (See BioWorld Today, Sept. 8, 2006, and Dec. 12, 2006.)

TLRs are proteins found on the surfaces of antigen-presenting cells and are believed to be targets for a broad range of indications. Since 1999, Coley has been developing VaxImmune, a TLR-9 agonist, that's designed to work as a vaccine adjuvant to induce a rapid immune response by enhancing both antibody levels and killer T-cell responses to infections or tumors. Data have suggested that the addition of that adjuvant can boost immune response to the antigens contained in vaccines. "We like to think of it as the emerging gold standard in vaccine adjuvants," Bratzler told BioWorld Today. He added that between Coley and its partners, VaxImmune has been tested in "more than 35 clinical trials in [the areas] of infectious diseases, biowarfare and cancer."

Coley previously licensed nonexclusive rights to VaxImmune to London-based GlaxoSmithKline for its work on cancer vaccines, and several clinical trials are under way. Basel, Switzerland-based Novartis also has rights to the technology, which it is using in vaccines for infectious diseases. Coley also provides VaxImmune to develop enhanced vaccines against potential biowarfare and other infectious agents under government contracts, including an anthrax vaccine in development by Emergent BioSolutions Inc., of Rockville, Md.

Coley's goal is to leverage the VaxImmune technology in partnerships with other companies, since its own internal pipeline involves therapeutics rather than vaccines, Bratzler said.

The company's lead program, which it partnered in 2005 with New York-based Pfizer Inc. in a potential $505 million deal, also targets TLR-9. That product, designated PF-3512676, recently finished enrolling a total of 1,600 patients with advanced non-small-cell lung cancer in two Phase III trials. The studies are designed to evaluate the compound, in combination with chemotherapy, as a first-line treatment. Overall survival is the primary endpoint. In addition, Pfizer is conducting several other trials of PF-3512676, including Phase II testing in combination with targeted cancer drugs in NSCLC patients. (See BioWorld Today, March 25, 2005.)

Coley has an earlier-stage program partnered with Paris-based Sanofi-Aventis group to develop TLR-targeted compounds against allergy, allergic rhinitis and chronic obstructive pulmonary disease. That deal could be worth up to $265 million.

Beyond that, "we've got an interesting preclinical pipeline," Bratzler said, in the areas of lupus and rheumatoid arthritis, as well as an immunostimulatory RNA program aimed at infection.

In January, the company suspended enrollment in a TLR-9 compound in development for hepatitis C virus (HCV), citing limited efficacy in Phase I and Phase II trials and the growing competition in the HCV space. At that time, the firm also cut its work force by 22 percent, mostly in the area of drug development. (See BioWorld Today, Jan. 24, 2007.)

Coley, which went public at $16 per share in one of the most successful initial public offerings of 2005, posted a net loss of $5.2 million, or 20 cents per share, for the fourth quarter of 2006. It ended the year with cash totaling about $107 million.

The company's shares (NASDAQ:COLY) gained 22 cents Thursday to close at $10.20.

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