Nuvelo Inc.'s stock benefitted Thursday when the company entered a collaboration with pharmaceutical giant Bayer HealthCare AG to develop and commercialize the cardiovascular drug alfimeprase.
The company's shares (NASDAQ:NUVO) jumped 40.6 percent, or $3.66, to close at $12.67. The deal, which covers ex-U.S. development and commercialization rights, entails up-front and milestone payments of up to $385 million.
"This is by far the largest and most important deal we've ever done," Nuvelo chairman and CEO Ted Love told BioWorld Today. "It does a lot of things for the company."
For one, it highlights the commercial potential for alfimeprase, a blood clot-dissolving agent that could reach the U.S. and European markets in 2008 to treat acute peripheral arterial occlusion (PAO) and central venous catheter occlusion (CO). In the U.S., sales could reach $300 million annually for those two initial indications, said Mark Monane, an analyst with New York-based Needham & Co. Inc. Beyond that, the sky's the limit.
"Just stroke alone could be a $2 billion market," he said, adding that wherever there's a catheter and a clot, "alfimeprase may be a very useful option."
The agreement also significantly strengthens Nuvelo's financial position and allows it to develop alfimeprase for other indications, such as stroke and deep-vein thrombosis (DVT), as well as heart attack and pulmonary embolism.
As of Sept. 30, Nuvelo reported $75.5 million in cash, cash equivalents and short-term investments. Now, through the Bayer alliance, it expects to receive $90 million in payments this year, which includes a $50 million up-front payment and another $40 million in shared development expenses and a milestone payment for starting a Phase II proof-of-concept trial in stroke.
A research note from Liana Moussatos and colleagues at San Francisco-based Pacific Growth Equities LLC said positive clinical results in stroke and DVT could significantly raise the firm's fair value estimate for Nuvelo. Pacific Growth called Bayer an "appropriate partner," saying the company "already sells acute care products and has a sales force in all relevant global territories."
Those territories include everywhere but the U.S., where Nuvelo intends to build its own 100-person sales force upon receiving initial Phase III results.
San Carlos, Calif.-based Nuvelo could receive up to $165 million in development milestones and $170 million in sales and commercialization milestones. For sales that occur outside the U.S., Nuvelo would receive tiered royalties ranging from 15 percent to 37.5 percent, which Love said the company believes is an "achievable number."
Bayer, of Leverkusen, Germany, also will pick up 40 percent of the global development costs, leaving Nuvelo with the remaining percentage and the final say on how to design and conduct all alfimeprase development programs.
As the company conducts four Phase III trials for the initial indications - two ongoing, and two to start in the first half of 2006 - it also will launch a Phase II program in stroke in the second half of this year, and a Phase II program in DVT in 2007.
"These are big markets," Monane said. "And alfimeprase is a relatively safe drug. That we know. The question is: What setting is it going to work best in? That we don't know."
The four Phase III trials consist of two for PAO (one begun last April, and one that received a special protocol assessment from the FDA in December) and two for CO (one begun in September, and a companion trial slated to start in the first half of the year). The PAO trials are identical to one another: Each will enroll 300 patients, half of whom will receive drug and the other half placebo, and the endpoint is the avoidance of open vascular surgery within 30 days of treatment. (See BioWorld Today, April 19, 2005.)
The catheter occlusion trial that started in September is enrolling 300 patients, 200 of whom will receive the drug and 100 of whom will receive placebo. The endpoint is the opening up of the occluded catheter in 15 minutes. All trials are blinded, except for the fourth one. An open-label study, it will enroll 800 patients who will receive alfimeprase.
If alfimeprase can clear a clot within 15 minutes, Nuvelo's drug may have a significant advantage over the currently marketed product for CO, Cathflo Activase (alteplase, Genentech Inc.), which can take up to four hours. There are no approved clot dissolvers for PAO, although plasminogen activators often are used off label but can take 24 to 36 hours to clear a clot because they act indirectly. Also, they carry the risk of causing a lytic state, with 5 percent to 16 percent of patients suffering a major incidence of bleeding. Alfimeprase has been shown to degrade peripheral arterial clots within four hours of dosing, and the drug's lytic activity is localized to the site of delivery.
Alfimeprase, a derivative of the fibrolase enzyme, works by directly degrading fibrin. It fell into Nuvelo's hands about 13 months ago when the company licensed it from Amgen Inc., of Thousand Oaks, Calif. "Our agreement with Amgen is totally unaffected by the deal that we did [Thursday]," Love said. "We continue to have the previously existing obligations to Amgen," including milestone and royalty payments that are "much different than what we're getting from Bayer."
Amgen and Nuvelo first came together in January 2002 through a deal in which Nuvelo - a company that Love said had "no money" at the time - needed to pay all of the alfimeprase costs going forward until its investment reached the same level of Amgen's investment. That point was reached in November 2004, and Amgen had an option to either pay 50 percent of the costs going forward or to license alfimeprase to Nuvelo. It chose the latter. (See BioWorld Today, Jan. 10, 2002, and Nov. 3, 2004.)
That allowed Nuvelo to control the drug's future.
It just goes to show that "maybe Mick Jagger was right," Monane said. "You don't always get what you want, but you finally get what you need."