In an industry where closing a deal can drag on because of due diligence and negotiations, it's rare to see one completed ahead of schedule. Yet Ambrilia Biopharma Inc. found itself in that fortunate situation this week after closing a whirlwind $232 million HIV deal with Merck & Co. Inc.
Ambrilia granted Merck exclusive worldwide rights to its Phase I protease inhibitor, PPL-100. In exchange, Ambrilia will receive an up-front licensing fee of $17 million, up to $215 million in milestone payments and royalties on future sales. The first milestone payment of $3 million is expected in November when Ambrilia completes an ongoing Phase I study. Merck will shoulder future development costs and pay additional milestones and royalties on any related compounds it develops.
Ambrilia initially had planned to complete both single- and repeat-dose Phase I studies, as well as get into Phase II before seeking a partner for PPL-100 in early 2007. But after presenting Phase Ia data from the single-dose study at a conference in Spain this past June, the Montreal-based company was "bombarded with calls," said president and CEO Hans M der.
"After Spain, we got phone calls and started due diligence with several biotech and pharma companies," said M der, who described the negotiation process as "competition-driven."
The joint announcement with winning suitor Merck on Thursday drove heavy trading of Ambrilia's stock, with volume topping more than 7 million on the Toronto Stock Exchange. The shares (TSX:AMB) rose C2 cents to close at C44 cents (US38 cents).
David Martin, analyst with Toronto-based Dundee Securities Corp., said the deal "came sooner" than he had anticipated, and noted that the stock price has "more than doubled in the past six months."
"I think there were some people taking profits on the news," he said, pointing to the heavy volume, but relatively flat close.
Ambrilia's stock was trading below C20 cents near the end of May, and slowly has climbed from there.
In the Phase Ia study, PPL-100 demonstrated a half-life of up to 36 hours, indicating its potential for once-daily administration. Although protease inhibitors are a key component in the standard of care for HIV, none are once daily. The only marketed, once-daily, single-pill HIV treatment is Atripla, which does not contain a protease inhibitor.
PPL-100's long half-life contributes to benefits other than once-daily convenience, said Chandra Panchal, executive vice president of business development, licensing and intellectual property at Ambrilia. The drug is "maintained in the body at certain levels," which makes patients "less likely to get resistance." It also "allows forgiveness in case patients forget to take a dose."
Studies have shown the drug to be well tolerated and to have a high genetic barrier that could make it more difficult for the HIV virus to develop resistant strains, the company said, noting that it also might increase the sensitivity of the virus to some existing protease inhibitors. Those early findings indicate the potential for once-daily, un-boosted use both in first-line and drug-resistant HIV.
Like other protease inhibitors, PPL-100 binds specifically to HIV-1 protease, an enzyme involved in the virus' maturation. Inhibiting that enzyme results in the formation of immature and non-infectious viral particles. PPL-100 is based on the amino acid lysine but has a unique structure and does not induce the activities of CYP3A4 and 2C9 enzymes, which are responsible for the side effects of some other protease inhibitors. Panchal said PPL-100 actually inhibits CYP3A4.
When Ambrilia completes its ongoing Phase I repeat-dose pharmacokinetic study next month, Merck plans to initiate additional Phase I trials, Janet Skidmore, director of media relations at Merck told BioWorld Today. Skidmore added that the Ambrilia deal demonstrates Merck's "continued commitment" to HIV/AIDS, a field in which it has conducted research for "more than two decades."
Merck's existing HIV franchise includes the protease inhibitor Crixivan (indinavir sulfate), which it markets worldwide; the non-nucleoside reverse transcriptase inhibitor (NNRTI) efavirenz, which it markets in some countries outside of the U.S. as Stocrin; and the combination pill Atripla, which it plans to market with Gilead Sciences Inc. in developing countries and which Gilead markets with Bristol-Myers Squibb Co. in the U.S.
Merck also is developing a Phase II HIV vaccine, V526, and a Phase III integrase inhibitor, MK0518, which Skidmore said will be submitted to the FDA in 2007.
Ambrilia also has other HIV programs in development, namely an SPC3 fusion inhibitor and an integrase inhibitor, both of which are early stage. The company's pipeline also includes four oncology product candidates and an early stage peptide program in virology. M der said the lead oncology drug, a prolonged-release formulation of octreotide for pituitary tumors, will be submitted for regulatory approval next year.