Gilead Sciences Inc. is putting $25 million into Corus Pharma Inc., and has an option to buy the rest of the respiratory disease-focused firm down the road.
The deal makes Gilead, of Foster City, Calif., the second largest shareholder in privately held Corus. Less than two months ago, Corus withdrew plans for a projected $100 million initial public offering filed a year and a half ago. (See BioWorld Today, Aug. 31, 2004.)
Gilead received preferred shares in Seattle-based Corus and will have an exclusive option to purchase the remaining shares at a pre-specified price. Neither that price, nor an expiration date on the option, was disclosed.
Corus' lead product candidate, Cayston (aztreonam lysine), is an inhaled antibiotic scheduled to complete Phase III enrollment later this year. The FDA-designated orphan drug is active against Gram-negative bacteria such as Pseudomonas aeruginosa, which can cause lung infections in patients with cystic fibrosis. The pivotal program is evaluating it as a potential treatment for cystic fibrosis-related pulmonary infections.
"Gilead's investment will help provide Corus with the resources necessary to continue its Phase III studies," John Milligan, Gilead's executive vice president and chief financial officer, said in a conference call. Others at the company declined to comment further on the transaction, and officials at Corus could not be reached.
In a Phase II study that tested two doses of the "promising" drug, as Milligan called it, there was a significant decrease in the amount of pulmonary P. aeruginosa as measured by sputum density in both Cayston groups, which showed greater than or equal to 97 percent reduction from baseline. In addition, in patients with abnormal lung function at baseline, in both dose groups there was overall significant improvement over the whole study in lung function as measured by percent change in a measure of forced expiratory volume in one second.
The product is delivered with the eFlow inhalation device from PARI GmbH, of Starnberg, Germany. Other products used to treat bacterial lung infections include inhaled bronchodilators, steroids and antibiotics that are delivered orally, intravenously and in aerosolized form. The latter product is sold as TOBI by Chiron Corp.
Notably, Corus is being sued by Chiron over Cayston. In the litigation, Emeryville, Calif.-based Chiron alleged trade secret misappropriation and other related claims against Corus and two of its officers, allegations that are being contested.
Milligan said Gilead would not decide to buy up the rest of Corus until risks associated with that lawsuit are characterized, and after Phase III data on Cayston are available. Those findings are expected in the fourth quarter.
Should Gilead decide against a full buyout, Milligan said it would nonetheless retain its one-quarter stake in the business and has an option to license an earlier-stage compound for cystic fibrosis-related pulmonary infections.
"This is a cash investment for Gilead," he added. "Our income statement will not be impacted."
Venture-backed Corus' investors include Bear Stearns Health Innoventures, Burrill & Co., JPMorgan Partners (now known as Panorama Capital), Novo A/S, OrbiMed Advisors and others. The company last raised private financing just before its IPO filing, with a $65 million Series C round, which was projected to last two years. Since its 2001 inception, it has raised $123.5 million, excluding the Gilead investment. (See BioWorld Today, April 13, 2004.)
On Thursday, Gilead's stock (NASDAQ:GILD) gained 34 cents to close at $61.43.