West Coast Editor
With pending FDA approval of Dacogen, its drug for myelodysplastic syndromes, SuperGen Inc. entered a cash-and-stock deal valued as high as $30 million - with $18 million up front - to take over Montigen Pharmaceuticals Inc. and its late-preclinical pipeline.
SuperGen's stock (NASDAQ:SUPG) closed Friday at $5.15, unchanged.
SuperGen will pay stockholders of Salt Lake City-based Montigen (who must still approve the agreement, expected to close in March) $9 million in cash and $9 million in SuperGen shares, with another $22 million in milestone payments.
"We never intended to spend a fortune on an acquisition," James Manuso, president and CEO of Dublin, Calif.-based SuperGen, told BioWorld Today, adding that the milestone payments increase in amounts from the filing of the first investigational new drug application, to the filing of the second IND, to the FDA's acceptance of the filing of an NDA.
For its money, the firm gets entry into two hot areas. Montigen's assets include its research and development team, a drug discovery technology platform and optimization process known as CLIMB, and late-stage preclinical compounds targeting aurora-A kinase and members of the tyrosine kinase receptor family.
The drug candidates have shown preclinical activity in solid tumors of several cancer types including breast, colorectal, ovarian, pancreatic and prostate.
Analysts liked the deal. Elemer Piros, of Rodman & Renshaw in New York, maintained his "market outperform/speculative risk" rating.
Lucy Lu, at First Albany, also in New York, held her "buy" rating, and Matthew Osborne, at Lazard Capital Markets did the same, though Dacogen and another SuperGen compound, Orathecin, are "still the story," Osborne wrote in a research note.
Said Manuso: "While we're not fully integrated in the grandest sense of the term, there is life after Dacogen."
At the close of the deal, David Bearss, founder and chief scientific officer, will join the SuperGen management team as vice president, chief scientist, along with his 12-person research and development team, and SuperGen will take over Montigen's facilities in Salt Lake City.
The highly regarded Bearss conducted the research underlying Montigen at the University of Arizona in collaboration with Daniel Von Hoff, a scientific adviser to SuperGen and the head of Montigen's scientific advisory board. Von Hoff is renowned, as well, having helped develop such oncology drugs as Gemzar and Taxol.
Dallin Anderson, CEO of Montigen, "has agreed to take on a commercial development position" with SuperGen, Manuso said. "Everyone, as of the closing, will become SuperGen employees" and "minor, though meaningful additions to our respective teams" will be made later.
Recent newsmakers in Montigen's two areas of focus - soon to become SuperGen's - include Richmond, Calif.-based Onyx Pharmaceuticals Inc. and partner Bayer Pharmaceuticals Corp., of West Haven, Conn., who gained FDA marketing approval in December for Nexavar (sorafenib) in patients with advanced renal-cell carcinoma.
The drug is an oral multi-kinase inhibitor that targets serine/threonine and receptor tyrosine kinases in both the tumor cell and tumor vasculature. (See BioWorld Today, Dec. 21, 2005.)
The month before, Tarceva (erlotinib), a small-molecule tyrosine kinase inhibitor that works by targeting the epidermal growth factor receptor pathway, won approval as a first-line therapy in patients with pancreatic cancer not given prior chemotherapy.
Tarceva, from OSI Pharmaceuticals Inc., of Melville, N.Y., and with South San Francisco-based Genentech Inc., previously was cleared for non-small-cell lung cancer that has advanced after chemo. (See BioWorld Today, Nov. 4, 2005.)
Aurora kinases also look promising. In December, Vertex Pharmaceuticals Inc., of Cambridge, Mass., said a Phase I study of VX-680 (MK-0457) in patients with solid tumor cancers showed activity on a clinically relevant biomarker.
The drug is the lead compound in the company's collaboration with Whitehouse Station, N.J.-based Merck & Co. Inc., which has selected a follow-on compound for development as part of the collaboration and paid Vertex two milestone payments totaling $19.5 million.
Last week, Rigel Pharmaceuticals Inc., of South San Francisco, gained a $5 million milestone payment from Serono SA, of Geneva, triggered by the progress on the investigational new drug application for R763, for which Phase I trials in cancer patients are expected to start later this year.
R763 is an orally available multi-Aurora kinase inhibitor, part of the program licensed by Serono in October, in a deal worth up to $160 million. (See BioWorld Today, Oct. 26, 2005.)
In September, the FDA issued an approvable letter for Dacogen (decitabine) injection, the treatment for myelodysplastic syndromes partnered between SuperGen and MGI Pharma Inc., of Minneapolis, but asked for more information.
The firms said in December that the agency accepted their resubmission of a complete response and established a user fee goal to review it by May 15. (See BioWorld Today, Sept. 6, 2004.)
SuperGen also is in the process of taking over the European marketing of its injected leukemia drug Nipent (pentostatin), and is conducting a Phase II study with Orathecin (rubitecan) in the U.S. in combination with gemcitabine as a first-line therapy for advanced pancreatic cancer patients who have not undergone chemotherapy.
"We wanted to round out our capabilities [with the Montigen buyout] and introduce a later-stage discovery operation that could rapidly introduce new compounds," Manuso said, adding that the firms had "explored the potency of a potential combination for quite some time" after they were introduced by Von Hoff early last year.
"We both came to this with our eyes wide open and our arms outstretched," he said.