Giving up its 2007 option to reacquire marketing rights to Zenapax to prevent acute kidney transplant rejection, Protein Design Labs Inc. signed another deal, this one worth $155 million, to further expand development of Zenapax with Hoffmann-La Roche Inc.

The companies will co-develop the subcutaneous form of the product (daclizumab) for organ transplant patients on long-term, maintenance therapy, and PDL will retain a co-promotion option in the U.S. for that indication.

The agreement "potentially expands the market for daclizumab and may offer new efficacious and more tolerable treatment options for transplant patients," said Jim Goff, PDL's senior director of investor relations.

Fremont, Calif.-based PDL and Nutley, N.J.-based Roche are co-developing daclizumab for asthma and respiratory disorders, and Roche markets the product for induction kidney transplant therapy. PDL previously received a double-digit royalty on those sales, but will not receive the royalty going forward, Goff said.

Under a previous agreement, PDL had an option to pay Roche in 2007 to regain full promotion rights to Zenapax for the marketed indication. The new agreement, however, takes away that option, as well as the $20 million payment to Roche.

Instead, PDL will receive a $10 million up-front payment and up to $145 million in potential milestone payments. Roche will continue to manufacture and promote intravenous Zenapax exclusively worldwide, and both companies will share equally in global development costs of the subcutaneous version. Outside the U.S., PDL will receive royalties on net sales of daclizumab for transplant maintenance.

"I think we decided to do the deal with PDL because it's a product that, used in this indication, has the potential to deliver the chronic therapy with less toxicity than with the regimens currently used," said Dennis Burns, Roche's vice president and global head of business development. The deal provides the opportunity to really benefit patients, he added, and "patient benefit is always the cornerstone of the foundation behind commercial success."

The companies expect to start Phase II trials in transplant maintenance in 2006. Transplant patients currently are treated with the combination therapy of Roche's CellCept (mycophenolate mofetil) with a calcineurin inhibitor, such as cyclosporine, and steroids to prevent organ rejection.

The long-term use of the current inhibitors, however, can lead to kidney toxicity, diabetes and cardiovascular disorders, so the hope is to use daclizumab subcutaneous in combination with CellCept to reduce, or eliminate, the use of the more toxic drugs.

"Currently, Zenapax is only used acutely in transplantation, and this daclizumab subcutaneous program will enable the chronic use of daclizumab subcutaneous," Goff said.

Roche originally acquired worldwide rights to daclizumab in 1989. The product gained FDA approval in 1997 to prevent renal allograft rejection, and in 2003, Roche returned to PDL all rights to the product except in transplantation where PDL retained the option. In September 2004, Roche picked up co-development rights of daclizumab subcutaneous in a $205 million deal for respiratory disorders. A Phase IIb study in asthma is expected to begin in the first quarter of 2006. (See BioWorld Today, Oct. 1, 2003, and Sept. 17, 2004.)

Roche's decision to drop development of daclizumab came after the product failed as a maintenance therapy in psoriasis. It also failed in Phase II trials in May 2004 for ulcerative colitis. But Roche decided to pick up rights to the product again after PDL presented it with compelling Phase II data in respiratory disorders.

Goff and Burns said PDL originally reacquired rights to the product so the company could develop it alone for autoimmune and inflammatory conditions.

"There was a point in PDL's evolution as a company where they wanted a stronger commercial presence on this," Burns said, "and within constraints and also meeting the needs of Roche and our commitment to the transplant community, we found a way to help them grow."

But those needs have changed, and the companies have learned to be flexible. That is a "very good basis of why this alliance continues to go on," Burns said, noting that the original agreement with PDL represents Roche's first relationship with a biotechnology company.

PDL is developing a number of clinical products aside from daclizumab, including Nuvion (visilizumab) for ulcerative colitis and Crohn's disease, ularitide for acute decompensated heart failure, volociximab for solid tumors, terlipressin for Type I hepatorenal syndrome, and HuZAF (fontolizumab) for moderate to severe Crohn's disease.

In August, PDL entered a potential $800 million deal with Cambridge, Mass.-based Biogen Idec Inc. to develop daclizumab for multiple sclerosis and indications other than transplant and respiratory illness. A Phase II study in MS began in the second quarter. The agreement also included rights to volociximab and fontolizumab for all indications. (See BioWorld Today, Aug. 4, 2005.)

PDL's stock (NASDAQ:PDLI) dropped 52 cents Tuesday to close at $27.50.