West Coast Editor
Cytogen Corp. is buying out the Quadramet royalty deal with Berlex Inc. for $6 million in cash and 623,441 shares of Cytogen stock priced at $3.21 per share (about $2 million), plus two payments based on net-sales milestones.
If the bone-cancer pain drug's sales hit $20 million in the U.S. during a 12-month period, Cytogen will pay Berlex about $3.3 million on a one-time basis, and if sales reach $30 million, Cytogen will pay about $5 million the first time that happens.
"We'd like very much to pay those milestones," said Michael Becker, president and CEO of Princeton, N.J.-based Cytogen, noting that Quadramet made up $8.4 million in revenue for the firm last year, more than half the $16 million total.
Cytogen's stock (NASDAQ:CYTO) closed Monday at $3.50, up 23 cents.
Indicated for the relief of pain in patients with confirmed osteoblastic metastatic bone lesions that enhance on radionuclide bone scan, the flagship Quadramet was approved about nine years ago and combines radioactive samarium Sm-153 with a small-molecule, bone-seeking phosphonate. (See BioWorld Today, April 1, 1997.)
Speaking before Monday's late-afternoon conference call regarding first-quarter earnings, Becker told BioWorld Today the deal with Berlex is "all about control" of Quadramet's fate, as Cytogen goes about broadening the drug's use beyond pain to cancer.
Quadramet works "not through masking the body's perception of pain, but it actually has an effect on what's causing the pain, which is the tumor," he said. "That's not much different from the indication we'd be seeking for therapy," and 15 trials are ongoing at cancer centers.
William Goeckeler, Cytogen's vice president of operations, invented Quadramet at the University of Missouri. Dow Chemical Co., of Midland, Mich., licensed the compound, and Goeckeler followed the compound to Dow, which licensed Quadramet to Cytogen.
"Berlex was simply the marketing partner," Becker explained. "I saw a product that had huge unappreciated opportunity, and I didn't feel it had been given its day in the sun."
In August 2003, Cytogen completed the reacquisition of marketing rights held by Berlex for an up-front payment of $8 million and royalties. "We're a little bit stronger than we were at that point," Becker said, so Cytogen through the latest transaction is able to "capture the lion's share" of Quadramet's value.
Although the firm cannot yet promote the drug against tumors, a physician "knowing in the back of [his or her] mind that it might also have a positive impact on the patient's survival" might prescribe it off label, given the mechanism of action, Becker said.
He compared Quadramet to Thalomid, the formulation of thalidomide from Summit, N.J.-based Celgene Corp. Approved only for leprosy, Thalomid got an approvable letter from the FDA late last year for multiple myeloma, saying the agency wanted revised product labeling to specify those with newly diagnosed disease as its intended patient population along with updated safety information, as well as some additional patient information to finalize its review. (See BioWorld Today, Nov. 16, 2005.)
Meanwhile, though not approved for cancer, Thalomid's off-label use in oncology accounts for most of its sales, which jumped 21.3 percent in the first quarter to $107.2 million.
At the June meeting of the American Society of Clinical Oncology in Atlanta, Cytogen will offer data with Quadramet combined with Velcade (bortezomib) for MM. Velcade, a proteasome inhibitor from Cambridge, Mass.-based Millennium Pharmaceuticals Inc., won approval for that indication six years ago. (See BioWorld Today, May 15, 2003.)
Late last month, Cytogen agreed to sell its 50 percent ownership in a joint venture to Progenics Pharmaceuticals Inc., of Tarrytown, N.Y., in a deal potentially worth more than $65 million. The two came together in June 1999, after Cytogen bought privately held Prostagen Inc., of Allendale, N.J., and the joint venture - named PSMA Development Co. LLC - had Progenics funding preclinical work, with both firms contributing to later efforts. (See BioWorld Today, June 17, 1999.)
Selling the JV interest is "a whole separate chapter," Becker said, although that deal, too, involved getting control - specifically, of "programs that we're pursuing [independently], and eliminating or reducing our expenditures on what were essentially very early stage projects."
Earlier this year, Cytogen offered Phase II data with Quadramet in prostate cancer patients with metastatic bone diseases at the American Society of Clinical Oncology's Prostate Cancer Symposium in San Francisco. Data showed that within 12 weeks after treatment with Quadramet and docetaxel, prostate-specific antigen levels declined more than 50 percent in 34 percent of patients, and more than 75 percent in 21 percent of patients.
In another Phase II study that involved patients with progressive hormone-refractory prostate cancer with response or stabilization after induction therapy with docetaxel plus estramustine, the same combination treatment showed 69 percent of patients had a PSA response of at least 50 percent, 28 percent had a stabilization of disease and 3 percent progressed.
Brian Rye, analyst with Janney Montgomery Scott LLC in Philadelphia, said his firm views the Berlex agreement as generally "positive for Cytogen, if the company can, in fact, drive sales of Quadramet higher over the coming quarters and years."
At the end of the trading day, Cytogen reported record first-quarter revenues of $4.4 million, compared to $4 million in the same period last year, an increase of 12 percent, with a net loss of $7.7 million, or 34 cents per basic and diluted share, compared to $6.6 million, or 43 cents per share, for the period last year. Thomson Financial had estimated 35 cents per share. Quadramet sold $2.3 million. Prostascint, a prostate cancer imaging agent, sold $2.2 million.
Separately, Cytogen said Monday that the FDA has cleared an investigational new drug application for CYT-500, the company's lead candidate targeting prostate-specific membrane antigen, and a Phase I trial in patients with hormone-refractory prostate cancer is expected to start shortly.
CYT-500 uses the same monoclonal antibody from Cytogen's Prostascint (capromab pendetide) molecular imaging agent, but is linked with higher affinity to a therapeutic.
"The only rate-limiting step there is approval by the institutional review board," Becker said, adding that he expects the trial to begin at Memorial Sloan Kettering Cancer Center in the second half of this year.