In addition to making a $25 million investment in Monogram Biosciences Inc., Pfizer Inc. agreed to globally license Monogram's HIV Co-Receptor Tropism Assay to aid in the clinical development of its CCR5 antagonist maraviroc.

The investment will be made through a 3 percent senior secured convertible note, payable in May 2010, unless converted earlier. The conversion price will be a 20 percent premium to the average closing price of Monogram common stock during a certain period.

A year ago, Monogram (then called ViroLogic Inc.) acquired Mountain View, Calif.-based Aclara BioSciences Inc. in a deal worth about $180 million. The agreement entailed a contingent value right (CVR) liability that comes due in June, and New York-based Pfizer's $25 million investment will provide Monogram with "enhanced flexibility in being able to handle that," said its chief financial officer, Alfred Merriweather.

He noted that between the investment and the nonexclusive collaboration, Monogram's stock price moved up "fairly substantially, and is an indicator of our potential strength in our HIV business."

Shares (NASDAQ:MGRM) climbed 36 percent Monday, or 61 cents, to close at $2.30.

Pfizer and Monogram, of South San Francisco, first started working together in 2002 when ViroLogic became Pfizer's preferred supplier for HIV resistance testing technology and services to support the HIV development programs. About 18 months ago, Pfizer started a Phase III trial in the U.S. of maraviroc, which uses Monogram's tropism assay to select patients for enrollment who are most likely to respond to the therapy. With this new agreement, Pfizer now can make the assay available globally, meaning it can be used in international trials of maraviroc.

The deal is significant for Monogram because of the size of the HIV market, Merriweather said, and the possibility that regulatory approvals of maraviroc would require the use of the company's assay.

"This would be used initially to determine whether a drug would be prescribed or not," Merriweather told BioWorld Today, adding that maraviroc may be the "first drug in HIV that has a test that's directly linked to its use."

Monogram's assay is able to show tropism, which is the path taken by the HIV virus to access human CD4 cells. The information is meant to help identify those most likely to respond to CCR5 antagonists. About 80 percent to 85 percent of newly diagnosed untreated HIV patients have dominant CCR5-tropic virus. Of those treated with anti-retroviral medicines, the percentage drops to 50 percent to 60 percent.

Pfizer has said that it intends to file a new drug application for maraviroc by the end of the year.

Founded in 1995 as ViroLogic, Monogram changed its name last year following the acquisition of Aclara and its oncology technologies because the former name "somewhat restricted" the company's focus to viral diseases, Merriweather said. The company went public in 2000 and offers a line of drug-resistance tests, such as PhenoSense HIV, GeneSeq and PhenoSense GT. With Aclara, it gained the eTag System, a protein-based technology that can be formatted to test biopsy-sized samples of patient tumors.

Monogram released its first-quarter results Monday, showing revenues of $13.2 million, driven mainly by its HIV testing products ($12.2 million) and including some money coming from its oncology and eTag collaborations ($500,000 million).

The company posted a net loss of $3.4 million, or 3 cents per common share, and said it had about 130.2 million shares of common stock outstanding. It also had $67 million in cash, cash equivalents and short-term investments as of March 31. Including the $25 million Pfizer investment, however, the cash resources would rise to $92 million.

In connection with the CVRs outstanding as of March 31, the maximum amount payable by Monogram is $57 million - $32.4 million in cash and the rest in cash or stock.

The amount of the June payment will be related to the volume-weighted average price of Monogram's common stock in the 15 trading days beginning May 19 and ending June 9.