Cancer drug company AVEO Pharmaceuticals Inc. is partnering a preclinical antibody program with Schering-Plough Corp. for worldwide development and commercialization in a deal that could be worth up to $477.5 million.

It's the largest collaboration to date for the privately held, Cambridge, Mass.-based AVEO, which previously signed two partnerships with Merck & Co. Inc. and in-licensing deals with Japanese firms Mitsubishi Pharma Corp. and Kirin Brewery Co. Ltd. When seeking a collaborator for AV-299, an antibody designed to bind to and inhibit the hepatocyte growth factor/scatter factor (HGF/SF), AVEO was looking for a large firm that would fund AVEO's ongoing clinical and regulatory work through proof-of-concept, as well as additional research to determine which patient populations should be targeted with that therapy, said Tuan Ha-Ngoc, AVEO's president and CEO.

"We talked to a dozen companies," he said, but added that Schering-Plough stood out, as far as understanding AVEO's focus on cancer biology and "respecting what we have to bring to the party."

What AVEO has is its Human Response Prediction (HRP) platform, technology that's designed to "recreate in mouse models tumor activity that is as close" to the activity seen in humans, Ha-Ngoc told BioWorld Today. That platform aims at identifying genetic correlations between responding and non-responding tumor populations so that clinical development can be targeted specifically to those patients most likely to benefit from a particular treatment.

For example, he said, AV-299 aims at inhibiting the HGF/c-Met pathway, a pathway that often correlates to poor prognosis for cancer patients whose tumors are HGF-dependent. But the antibody likely would not show activity in treating tumors that are not dependent on HGF. So far, in preclinical development, AV-299 has shown promise, and AVEO plans to enter the clinic early next year. Pending positive results, Phase II studies could begin in 2009.

Schering-Plough agreed to fund all research and development expenses. In addition, the Kenilworth, N.J.-based firm will pay AVEO $7.5 million up front, plus a $10 million equity investment. Commercial and development milestones - pending approval of AV-299 in "multiple indications" - could exceed $460 million. On top of that, AVEO would be eligible for royalties. It also holds a co-promotion option in the U.S., which would "help us retain part of the value created," Ha-Ngoc said.

"We have two other programs in development," he said, referring to AV-951 and AV-412, which were licensed from Kirin and Mitsubishi, respectively. So, by the time AV-299 could potentially hit the market, "we may already have a commercial infrastructure in place."

Designed to inhibit the vascular endothelial growth factor (VEGF) receptor - the same angiogenic pathway targeted by South San Francisco-based Genentech Inc. s top-selling cancer drug, Avastin - AV-951 is expected to start Phase II trials later this year. AV-412, a next-generation oral tyrosine kinase inhibitor of endothelial growth factor receptor (EGFR) and HER2, is in Phase I. AVEO holds worldwide rights to both products, except for Asia.

The company also has an ongoing collaboration with Whitehouse Station, N.J.-based Merck to use its HRP platform to identify potential patient populations for clinical trials testing Merck's cancer compounds. The deal, signed in the fall of 2005, includes an equity investment, research funding and clinical milestone payments.

"Up until our system, without that [genetically-defined cancer mouse] model, trials would test a drug in hundreds of patients, and it might be hit or miss," Ha-Ngoc said. With the HRP technology, AVEO can do the equivalent of those early clinical trials in mice instead.

As well as greater efficacy potential, that technology could significantly impact the controversial issues of drug pricing and reimbursement.

With a drug that "demonstrates only a 15 to 20 percent efficacy in a certain population," it can be difficult "to justify the costs of those drugs," he said. "But if you can show 60 to 80 percent efficacy in a particular subsegment of that population, and go after the patients where it will have the most benefit, then you can justify that pricing."