West Coast Editor

Just after kicking off a Phase II/III trial with its lead insulin sensitizer, metaglidasen, in Type II diabetes, Metabolex Inc. entered a development and commercialization deal with Ortho-McNeil Inc. for that indication, as well as obesity and dyslipidemia, worth up to $548 million plus royalties.

The agreement includes metaglidasen and MBX-2044, as well as follow-on compounds for which Ortho, a subsidiary of Madison, N.J.-based Johnson & Johnson, gets an exclusive license.

"We have agreed upon plans, all the way to registration, for both of those compounds," said Harold Van Wart, president and CEO of Hayward, Calif.-based Metabolex.

Metabolex gets $40 million in equity and convertible financing and is eligible for $508 million in milestones.

With about $35 million in the bank before the deal, Metabolex now has enough to "take us through the end of 2008," Mark Bagnall, the company's chief financial officer, told BioWorld Today.

Currently available insulin sensitizers, which are full PPAR-gamma agonists from the thiazolidinedione (TZD) class, are chalking up worldwide sales of almost $4 billion, even with their dose-limiting side effects of weight gain and edema. They also carry warnings of heart-failure risk.

Metaglidasen and MBX-2044, on the other hand, are selective PPAR-gamma modulators, with a different chemical structure that may confer therapy for insulin resistance with a better side-effect profile.

Under the terms of the Ortho deal, Metabolex will conduct the ongoing Phase II/III study of metaglidasen and the Phase I trial of MBX-2044, with clinical, regulatory and technical support from Ortho.

Development costs for metaglidasen through the end of Phase II/III will be covered by Metabolex, and Ortho will pick up expenses thereafter, as well as all development and marketing expenses related to MBX-2044, for which Metabolex reported data from a dose-escalating study in March.

Metabolex keeps co-promotion rights for all compounds in the U.S., and stands to get double-digit, tiered royalties on all product sales up to 21 percent.

As part of the transaction, Metabolex gets an exclusive license to a PPAR-delta agonist program, including RWJ-800025, which has finished Phase Ib trials, and could be "ideally suited for certain forms of dyslipidemia," Van Wart said. Metabolex aims to start Phase II trials next year, when toxicology studies are finished.

There's also a license in the arrangement to Ortho's cannabinoid receptor-1 inverse agonist targeting obesity, which Van Wart described as "late-stage preclinical." He said the compound might prove to lack the side effects of Acomplia (rimonabant), the cannabinoid-Type I blocker for obesity from Paris-based Sanofi-Aventis Group that awaits approval in the U.S. after an approvable letter sought resolution of undisclosed issues.

"It will be our goal to get that into the clinic within the next few years," Van Wart said.

The package includes a target collaboration, too, which has Ortho and Metabolex working to screen metabolic disease targets identified by Metabolex.

"We weren't under pressure to take just any deal," Van Wart said, noting that Metabolex wanted a strong partner, something more for the pipeline, good milestones and royalties, and access to cash.

"We got what we were looking for, in all four categories," he told BioWorld Today. "It's hard to say any one is more important than the other."