Gilead Sciences Inc., more than seven years after acquiring the marketed cancer product DaunoXome through an acquisition, has decided to license out worldwide development and commercialization rights to Paris-based Diatos SA.

The product, a liposomal formulation of daunorubicin, has been sold by Gilead in more than 20 countries for AIDS/HIV-related Kaposi's sarcoma. Daunorubicin is a chemotherapeutic agent of the anthracycline class used to treat a number of hematological cancers. While systemic administration of the drug can lead to severe side effects and limits the dose, DaunoXome offers a sustained release of active daunorubicin, allowing higher doses with fewer side effects.

But DaunoXome has been a relatively "small product in the U.S." for Gilead, said Amy Flood, spokeswoman for Foster City, Calif.-based Gilead, which decided not to develop it for an expanded indication of acute myeloid leukemia (AML).

Under terms of the deal with Diatos, Gilead could receive $4.7 million in up-front and milestone payments, which are based on regulatory approvals of new indications, such as AML, for DaunoXome. The agreement also includes royalties for Gilead on net sales of the product.

Gilead doesn't break out the sales of DaunoXome in its earnings, Flood said, but for the first quarter, the company had total product sales of $559.4 million, mostly from its HIV products Truvada and Viread, as well as Hepsera for chronic hepatitis B. The lowest amount of sales disclosed was $10 million, brought in during the quarter by the HIV drug Emtriva. Gilead posted cash, cash equivalents and marketable securities of about $2.5 billion.

Gilead acquired DaunoXome when it bought out NeXstar Pharmaceuticals Inc., of Boulder, Colo., in 1999 for $550 million. At that time, NeXstar reported 1998 revenues of $108 million, mainly from the sales of infectious disease product AmBisome (liposomal amphotericin B), but with some coming from DaunoXome, as well. (See BioWorld Today, March 2, 1999.)

Gilead evaluated DaunoXome in several clinical studies in acute leukemic diseases, and Diatos plans to seek approval in Europe to use the drug to treat acute leukemia based on that data. It will continue to market the drug in Kaposi's sarcoma in Europe and Brazil. The company's press release made no mention of continuing to market DaunoXome in the U.S., where it was first approved in 1996.

In the leukemia trials, Gilead and independent investigators have shown that DaunoXome might offer a better pharmacokinetic profile and an improved tolerance vs. the non-liposomal form of daunorubicin. Those results have led to the product's off-label use for leukemia patients. A Phase III trial, completed in January, suggested a better long-term clinical outcome in elderly AML patients receiving DaunoXome compared to those receiving daunorubicin as a first-line treatment.

Diatos' president and CEO, John Tchelingerian, said in a statement that the agreement will help his company transform "into an integrated European cancer biopharmaceutical company with commercial capabilities." Diatos is expanding its portfolio of drug candidates with new compounds and in-licensed products that use its Vectocell delivery technology or its Tumor-Selective Prodrug technology.

Kaposi's sarcoma is a virus-induced cancer in which tumor cells and the abnormal growth of blood vessels form solid lesions in connective tissue. About 80 percent of all forms of the cancer are AIDS/HIV-related.

Leukemia is characterized by an uncontrolled growth of bone marrow stem cells, whose DNA has sustained genetic damage. AML is the most common type of acute leukemia in adults, and it affects more than 12,000 new patients each year in Europe.

The company's stock (NASDAQ:GILD) fell 19 cents Thursday to close at $56.60.