Viragen Inc. licensed rights to its alpha interferon product, Multiferon, to privately held Orphan Australia Pty. Ltd., which will market and sell the drug in Australia and New Zealand pending regulatory approval in malignant melanoma.

While specific terms of the deal were not disclosed, Viragen said it is entitled to an up-front license fee and milestones. Based on revenue forecasts, the 10-year agreement has an estimated value between $10 million and $15 million per year.

Australia has "the highest incidence rate of malignant melanoma in the world," said Doug Calder, director of communications for Viragen. He added that standard-of-care treatment is limited to surgery, and for high-risk melanoma patients the five-year survival rate is only 25 percent.

Published data from a German Phase II/III study of Multiferon, which is designed to "replicate the body's own immune response to disease," showed that in excess of 50 percent of patients receiving the drug as an adjuvant to surgery were alive at the seven-year follow-up analysis, Calder said. "It's doubling patients' chances of survival."

Though there are existing treatments using recombinant alpha interferon, those have not been effective in prolonging patient survival. Multiferon, however, is "actually sourced from white blood cells," which produce alpha interferon to trigger the immune system, Calder said. "We believe [Multiferon] is a prime candidate for cancers and a variety of viral indications," he told BioWorld Today.

As a relatively small company, Viragen opted to focus on one indication at a time, beginning with malignant melanoma. However, the product has gained approval in several countries - Mexico, Chile, Bulgaria, India, Indonesia, Hong Kong, Philippines, South Africa and Sweden - as a second-line treatment for patients with cancer and viral diseases who cannot tolerate or have failed existing interferon treatments.

But the company already has started moving toward a broader label for the product, namely as a first-line adjuvant therapy, in malignant melanoma. Viragen received approval in Sweden earlier this year for that indication and is seeking similar approvals across the European Union under the mutual recognition procedure. Calder said a decision from the EU is expected in late summer.

"So with the Australia agreement, it is our intent to seek first-line adjuvant therapy," he said.

Melbourne, Australia-based Orphan Australia will be responsible for getting the regulatory approvals, a process that's expected to take 12-18 months. Prior to approval, Multiferon will be made available to patients who need it on a named-patient basis.

The licensing agreement also includes an opportunity to potentially expand Orphan Australia's marketing rights into other countries in the Pacific/Asia region, as well as to broaden the product's use for other oncology indications.

The deal with Orphan Australia marks a definite shift in partnering strategy for Viragen, which in the past signed straight distribution agreements for Multiferon in various regions, such as the deals signed with Seoul, South Korea-based Kuhnil Pharm Co. Ltd. and Santiago, Chile-based Pentafarma SA. When President and CEO Charles Rice came on board in April 2004, "he decided to change the paradigm" toward true licensing arrangements that involved up-front fees, milestones and royalties, Calder said.

The deal with Orphan Australia is the first of those, though Calder added that Viragen is in "advanced negotiations with a European partner in anticipation of the broader EU approval."

The company, which is based in Plantation, Fla., has a research and development facility in Scotland and a manufacturing facility in Umea, Sweden. Beyond Multiferon, Viragen is developing VG101, a humanized monoclonal antibody for Stage IV malignant melanoma tumors, and VG102, another humanized monoclonal antibody for solid tumors. It's also in the process of developing its OVA avian transgenics system, a manufacturing platform that uses the egg whites of transgenic hens to produce therapeutic proteins and antibodies.

Shares of Viragen (AMEX:VRA) closed Friday at 15 cents, down 2 cents.