Washington Editor

Avigen Inc. is expanding its portfolio by way of an in-licensing deal that brings in tolperisone (AV650), a small molecule for disabling neuromuscular conditions, further distancing itself from its past as a gene therapy firm.

In the past year, the Alameda, Calif.-based company made "a strategic and complete shift to focus on neurology and pain," said Michael Coffee, its chief business officer. Now in the rear-view mirror is its focus on gene therapy. "This product," he told BioWorld Today, of AV650, which already is used in Europe, "is neuro-active and is going to be something that will be developed for neurological indications such as spasticity, as well as muscle spasms."

The company's president and CEO, Kenneth Chahine, called it "the leading treatment" in Europe for painful muscle spasms, "with nearly 5 million patients being prescribed the drug each year."

That represents about a third of the European market, and that extensive use there "gives us a lot of comfort and reduces the risk for us and our shareholders," he said during a conference call.

AV650 has never been submitted for approval in the U.S., but Avigen plans to soon file an investigational new drug application with the FDA and begin its development for acute spasms and eventually for chronic spasms, as well. "We will be in people this year," Coffee said, "and hopefully, we'll be in patients this year in Phase II," should the FDA permit more rapid development given the compound's long clinical history.

The company gained its exclusive North American rights through an agreement with SDI Diagnostics International Ltd., a division of Sanochemia Pharmazeutika AG. In exchange, Avigen will pay $3 million in up-front money, milestone payments that could total more than $90 million, based largely on blockbuster sales targets and to a lesser extent on clinical and regulatory successes, and low-double-digit royalties. Chahine noted the arrangement's "back-ended" terms and lack of dilution to shareholders as important factors for Avigen, and Coffee said the economic arrangement "underscores the confidence both parties have, as the majority of the financial benefits to the licensor is at very high sales levels."

The companies also entered a long-term supply agreement for SDI, a manufacturer of active pharmaceutical ingredients, to produce AV650 for Avigen, which has rights to all current and future formulations of tolperisone developed by SDI. An immediate-release formulation is sold in Europe these days, while development efforts on an extended-release version are under way at Vienna, Austria-based Sanochemia.

AV650 treats neuromuscular spasm and spasticity resulting from muscle injuries and serious neurological diseases, and there are about 30 years worth of clinical data based on its use in 30 European countries. Those existing data show that AV650 lacks sedative properties common to muscle relaxants and anti-spasticity agents used in this space, and it does not interact with alcohol like the others. As a result, Chahine said AV650 "has some very unique, differentiating and competitive advantage features."

Coffee called its market opportunity "quite large," as muscle relaxants and anti-spasticity agents currently generate more than $1.3 billion annually in the U.S. "But it's a highly genericized market," he added, "and at brand prices, a new product could do quite well."

The oral compound's precise mechanism of action is not fully characterized, but it possesses a high affinity for nervous system tissue and reaches its highest concentrations in brain stem, spinal cord and peripheral nerves. Like conventional muscle relaxants, this compound does not act directly on the muscles, but acts in the brain and is more of a total body relaxant.

AV650's mechanism of action may allow it to be developed for a broader use in treating chronic and severe neuromuscular conditions, including spasticity due to diseases like multiple sclerosis and Parkinson's disease, as well as spinal cord injury and stroke.

Beyond its newly acquired compound, Avigen has an existing neuropathic pain program that features AV411, which is approved outside the U.S. in a non-pain indication. The company plans to begin Phase II studies in Europe later this year, with Phase I work expected in the U.S.

In combination, the two compounds constitute a "robust pipeline of products that both have very attractive safety profiles," Chahine said. With about $68 million in cash reserves and a projected burn of $17 million for this year, "our focus is going to be really on developing AV411 and AV650 and getting them in the clinic as quickly as we can," he added, noting that Avigen's fiscal status would be sufficient to advance both products through Phase II.

Also in its portfolio are AV333 for neuropathic pain and AV513 for hemophilia. Recently, the company received a $12 million up-front payment by divesting its adeno-associated virus technology to Cambridge, Mass.-based Genzyme Corp. Avigen announced its plans to stop funding AAV gene therapy last spring. (See BioWorld Today, April 6, 2005, and Dec. 22, 2005.)

On Tuesday, its shares (NASDAQ:AVGN) gained 15 cents to close at $3.35.

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