West Coast Editor

A glitch in the early stage research deep-sixed Maxygen Inc.'s pact with F. Hoffman-La Roche Ltd. for a next-generation Factor VII product, but their older agreement related to finding new compounds for hepatitis B and C viruses continues.

"The unfortunate fact is, we were unable to establish large animal models [as Roche wanted]," said Russell Howard, CEO of Redwood City, Calif.-based Maxygen. "The drug didn't get a chance to succeed or fail."

Roche might be forgiven its jitters. The deal-breaking differences with Maxygen take place against a background of not only the safety controversy over NovoSeven, the strong-selling Factor VII compound for bleeding episodes in hemophiliacs from Novo Nordisk A/S, but also a Phase III failure of the drug in intracerebral hemorrhage (ICH).

With Basel, Switzerland-based Roche, Maxygen had been pursuing a product to be called MAXY-VII, but now that the potential $95 million deal ($8 million up front) is history, all rights to candidates revert to Maxygen, which is evaluating next steps. (See BioWorld Today, Dec. 16, 2005.)

"We have great data that we've shared publicly in small animal models, specifically the mouse," in which MAXY-VII proved "handsomely superior to NovoSeven," Howard told BioWorld Today. "Roche wanted an additional layer, and the models just aren't there to do this."

Maxygen entered the Factor VII deal in late 2005, and last year got $5 million as a manufacturing milestone payment, according to SEC paperwork related to the end of the agreement. Howard said he respects Roche's reasons for backing out.

In December 2005, the FDA issued a warning that NovoSeven could cause strokes and heart attacks in patients with normal blood, and an FDA study the following month blamed the drug for 43 deaths caused by clots.

Last November, NovoSeven became the subject of further controversy when news reports surfaced that more than 1,000 wounded troops in Iraq were injected with the compound. Although military doctors had reported an increase in clots, the defense department had no way of tracking the use of NovoSeven and could not prove a link.

In a "dear doctor" letter the same month, Novo warned that the "extent of the risk of arterial and venous thromboembolic adverse events after treatment with NovoSeven in patients without hemophilia is not known."

NovoSeven represented about 15 percent of Bagsvaerd, Denmark-based Novo Nordisk's total 2006 sales, with products for diabetes care making up the bulk of about DKK38.7 billion (US$6.8 billion) in sales.

Despite problems, Factor VII-based products show potential in areas other than hemophilia, such as ICH and trauma. But a Phase III trial in February showed that although the drug reduced the amount of bleeding in the brains of normal-blood patients suffering from ICH, it did not reduce the risk of longer-term disability or death.

Novo, Howard pointed out, has "not completely described the conditions of that Phase III study," and such elements as patient entry criteria still are not known.

"It may be that ICH is not a good area" to try as the route to the "big prize, which is trauma," he said.

In gaining approval of NovoSeven, Novo did not have to jump over the early testing hurdle demanded by Roche. Instead, the company showed that the drug worked in vitro with human platelets, performed mouse experiments and then went into the clinic.

"They were able to go ahead because they were comparing NovoSeven to nothing," Howard said. "There are some key opinion leaders who would say [to Maxygen], Just go into man. Why are you going into models that don't exist?'"

Howard's firm still is figuring out whether to proceed with MAXY-VII alone or with a new partner that might be interested in another indication, such as hemophilia, or might want to approach trauma through an avenue other than ICH.

Because the MAXY-VII research is still early stage, news of Roche's retreat did not hurt Maxygen much. Shares (NASDAQ:MAXY) closed Wednesday at $10.40, down 10 cents.

Maxygen entered the potential $230 million HBV/HCV deal with Roche in the spring of 2003, and the pharma giant paid a $2 million milestone last November when starting a Phase Ia with Maxy-alpha. Data are expected in the second half of the year with the PEGylated interferon alpha, also known as R7025. (See BioWorld Today, May 23, 2003.)

Separately Wednesday, Maxygen disclosed Phase I results with MAXY-G34, a next-generation granulocyte-colony stimulating factor (G-CSF) product for chemotherapy-induced neutropenia. In 40 healthy volunteers, the compound showed dose-responsive potency in neutrophil generation as measured by absolute neutrophil count and CD34+ stem cells. A Phase IIa trial in breast cancer is due to start in the first half of this year.

The half-life of MAXY-G34 is about 100 hours to 140 hours, more than twice that of Thousand Oaks, Calif.-based Amgen Inc.'s Neulasta (pegfilgrastim), noted analyst Michael King with Rodman & Renshaw in New York, who maintains an "outperform" rating on Maxygen with a $14 price target.