Privately held ARYx Therapeutics Inc. signed its first major partnership since its founding in 1998, granting to Procter & Gamble Pharmaceuticals Inc. worldwide development and commercialization rights to ATI-7505 in gastrointestinal disorders.

"It's not only a very significant deal, but it's a real milestone event for ARYx," said David Nagler, the company's vice president of corporate affairs.

Money flowing to Fremont, Calif.-based ARYx could reach $435 million, including a $25 million up-front payment and milestone payments based on the development and launch of the product. About $250 million of the milestones could be earned prior to commercialization. It also enables ARYx to "earn double-digit royalties once the product reaches the market," Nagler told BioWorld Today, adding that the percentage would "escalate based upon total sales."

The agreement includes an option for ARYx to co-develop and co-promote the product. If exercised, details would be ironed out later.

"It would obviously change the financial relationship based upon the agreement we've entered into," Nagler said.

An oral, serotonin type 4 (5HT4) agonist, ATI-7505 is in Phase II development and has exhibited prokinetic properties. It increases upper GI motility, which could reduce GI symptoms and benefit patients suffering from gastroesophageal reflux disease (GERD) and gastroparesis, the delayed emptying of the stomach.

Early studies showed that ATI-7505 prevented the regurgitation of stomach contents into the esophagus and accelerates the emptying of the stomach. The first of two Phase II trials was completed in patients with erosive esophagitis, and a second Phase II efficacy study is under way in patients with symptomatic GERD.

ARYx has not disclosed timelines for when a Phase III trial could start or when ATI-7505 could reach the market. Those decisions now are up to P&G.

"One of their first tasks will be [to decide] how they want to continue to develop the drug," Nagler said.

ARYx chose P&G Pharmaceuticals, of Cincinnati, a division of The Procter & Gamble Co., as a partner because of its expertise in GI disorders. The company markets Asacol, Prilosec OTC, Pepto-Bismol and Metamucil.

The potential for a drug like ATI-7505 is based on the success of another 5HT4 agonist, New Brunswick, N.J.-based Johnson & Johnson's Propulsid (cisapride), which achieved almost $1 billion in global sales before being withdrawn from the market in 2000 due to cardiac side effects.

By applying its RetroMetabolic drug design, ARYx is able to make products safer. It identifies a therapeutic target and mechanism, and then designs an ideal metabolite to pair with the mechanism, thereby avoiding drug-drug interaction concerns that make it difficult for patients to metabolize the medicines. Most drugs metabolize through the cytochrome P450 liver enzyme.

ATI-7505 has the same mechanism of action as Propulsid, but does not appear to have the same safety issues because of its design, Nagler said.

About 25 percent to 40 percent of adults experience heartburn or related symptoms associated with GERD each year. The condition affects about 4 percent to 7 percent of the global population, or about 250 million to 450 million people worldwide.

Gastroparesis occurs when contents from the stomach do not move efficiently into the intestine due to a malfunction in the muscular contractions. Symptoms include nausea, severe abdominal pain, as well as bacterial infections and weight loss. It affects more than 50 percent of diabetics.

A number of drugs on the market address GI disorders, including those marketed by P&G, but the most popular are proton pump inhibitors, such as Prilosec (omeprazole), which cut down on the amount of acid in the stomach and esophagus.

Likewise, ATI-7505 is designed to impact the acid levels, but it also "affects the way in which the stomach and esophagus operates, contracts, the way it moves drugs, and its motility of food through the GI tract," Nagler said. "We anticipate that if 7505 reaches the market, it will be useful to patients who currently don't benefit with proton pump inhibitors."

ARYx has two other drugs in clinical development: ATI-2042, an analogue of amiodarone, in a Phase II atrial fibrillation study; and ATI-5923 in Phase I development as an oral anticoagulant intended to improve the safety profile of warfarin. The company intends to partner each of those candidates.

In February, ARYx raised $30.4 million in a Series E round, bringing the total amount brought in to about $120 million. (See BioWorld Today, Feb. 8, 2006.)

The deal between ARYx and P&G remains subject to clearance under the Hart-Scott-Rodino Improvements Act.

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