South San Francisco-based Theravance will receive a $65 million up-front payment from Astellas, as well as up to $156 million in clinical and regulatory milestone payments. In return, it gains access to Tokyo-based Astellas' marketing infrastructure and development expertise.

Telavancin, a lipoglycopeptide injectable antibiotic, targets serious Gram-positive infections, including drug-resistant Staphylococcus aureus strains. It is in Phase III trials to treat complicated skin and skin-structure infections (cSSSI) and hospital-acquired pneumonia (HAP).

Of the milestone payments, $136 million are for the completion of enrollment, and the filing and approval of new drug applications for telavancin to treat cSSSI and HAP. Another $20 million would go to Theravance if it demonstrates in a Phase III trial that telavancin is superior to vancomycin in treating patients infected with methicillin-resistant S. aureus (MRSA).

Theravance also is entitled to royalties on global sales that range in percent from the high teens to the upper 20s.

"The terms of this transaction and the quality of the partner in Astellas, and what they wish to accomplish globally, fit very well with our plans for telavancin," said Rick Winningham, Theravance's CEO. "In addition, our ability to retain a significant degree of control through the launch phase of telavancin was very important to us."

The collaboration calls for Theravance to lead all development of telavancin for cSSSI and HAP, and collaborate closely with Astellas in U.S. marketing for the first three years following a launch. Astellas would lead all other development, regulatory, manufacturing, sales and marketing activities everywhere but Japan, where Theravance is exploring other partnering options. In terms of expenses, Theravance will cover costs to develop telavancin for cSSSI and HAP, and Astellas will take care of all costs to commercialize and further develop the product.

Astellas also has an option to commercialize and further develop TD-1792. The heterodimer antibiotic combines the antibacterial activities of a glycopeptide and a beta-lactam into one molecule, and it currently is in investigational new drug application-enabling preclinical studies.

Telavancin was discovered at Theravance using principles of multivalent drug design. Each Phase III program includes two studies of 750 patients each. Co-primary endpoints are non-inferiority in clinical cure rates and superiority in clinical cure rates, each comparing telavancin to vancomycin in treating patients with MRSA infections. The trials began in December 2004 and January 2005. (See BioWorld Today, Jan. 28, 2005.)

Vancomycin is the most-used treatment in the U.S. for Gram-positive infections. It often is used as a last resort, but it is considered a first-line therapy for Staphylococcus aureus infections in which antibiotic resistance is anticipated. In recent years, however, there have been increasing numbers of clinical failures with vancomycin.

"It's been a workhorse of the industry for quite a while, but it has to be given twice a day," said David Brinkley, Theravance's senior vice president of commercial development. "Telavancin is given only once a day, and in vitro it is very rapidly bactericidal. It kills the bacteria very quickly, compared to vancomycin."

Telavancin works the same way that vancomycin works by inhibiting peptidoglycan synthesis, but it has an additional mechanism of action that can affect membrane permeability and cell structure. If Theravance is successful in its Phase III trials, telavancin may set a precedent for other antibiotics to follow.

"This will be the first time that anybody has attempted to show superiority in this area," Brinkley told BioWorld Today. "The FDA requires a drug developer to show non-inferiority in order to get licensed."

Vancomycin hydrochloride was first developed and marketed by Indianapolis-based Eli Lilly and Co. under the trade name Vancocin. The company's patent expired in the early 1980s and a variety of generic drugmakers now market it under various names.

Theravance expects to complete enrollment in the cSSSI study in the first half of 2006, and in the HAP study in the second half of 2006, with Phase III results from both programs reported later in the year.

Winningham said that the market is growing at double-digit rates annually, and that there are more than 35 million treatment days globally for patients with serious Gram-positive infections. Treatment days provide a more accurate measure of the market size because they account for patients with endocarditis who receive treatment for 28 days or longer, as well as those with skin infections who receive treatment for only four or five days.

Depending on the Phase III results from the two ongoing telavancin programs, Theravance in collaboration with Astellas may expand its development of the compound by studying it in endocarditis and bacteremia. A small Phase II study in uncomplicated bacteremia is ongoing.

Behind telavancin, Theravance's next most advanced program is the Beyond Advair collaboration with GlaxoSmithKline plc, which pools together eight compounds - four from each company - to create an inhaled beta agonist that can be combined with a corticosteroid to form a new once-a-day version of Advair. The current Advair product, administered twice a day to treat asthma and chronic obstructive pulmonary disease, had more than $3.6 billion in sales to GSK in 2003.

Theravance's stock (NASDAQ:THRX) rose 55 cents Tuesday to close at $22.70.