After starting a pivotal trial last month, Sonus Pharmaceuticals Inc. now has secured a sweet deal for its cancer product Tocosol Paclitaxel, giving exclusive worldwide rights to Schering AG.

Terms include a $15.7 million equity investment in Bothell, Wash.-based Sonus, as well as a $20 million up-front license fee and milestone payments that could reach $132 million - making the agreement worth a total of $167.7 million, not including royalties.

Sonus' stock (NASDAQ:SNUS) climbed 34 cents to close at $4.40 Tuesday.

"Overall, we are very, very excited about this deal and pleased with both Schering as a partner and the terms of the agreement," said Michael Martino, president and CEO of Sonus. "Our ultimate goal is to get this product approved. This deal really enhances our ability to do that."

Sonus started a Phase III pivotal trial in September for Tocosol Paclitaxel to treat metastatic breast cancer. The two-arm, randomized study is comparing weekly dosing of the product to Taxol at about 150 clinical sites in North America, Europe, South Africa and Israel. The FDA agreed to a special protocol assessment in July. (See BioWorld Today, July 11, 2005.)

Sonus and Schering together expect to submit a new drug application for breast cancer by the end of 2007, while they continue to develop the product for other indications.

"This really puts us in a position to aggressively pursue the remaining clinical development and approval of this product, not just for a single indication, but for a family of indications," Martino told BioWorld Today.

Berlin-based Schering's equity investment in Sonus consists of 3.9 million shares at the Oct. 14 market closing price of $4.02. It also acquired five-year warrants to purchase 975,000 shares at $4.42 each. The investment gives Schering a 15 percent stake in Sonus, which has a little more than 30 million shares outstanding following the transaction.

The $132 million in milestone payments are based on the achievement of certain U.S., European Union and Japanese clinical and regulatory outcomes. Sonus also could receive sales milestone payments, in addition to royalties. U.S. royalties would start at 15 percent, scaling up to 30 percent depending on the level of sales achieved, while ex-U.S. royalties would remain at 15 percent.

"In the U.S., we will be sharing equally in the cost of developing the product," Martino said, explaining the tiered royalty structure.

Co-development includes the ongoing pivotal trial of Tocosol Paclitaxel and other studies to support a launch of the product, as well as trials exploring other indications. Martino declined to say what other indications the companies might pursue but said the approved indications for taxanes include solid tumors in metastatic breast, non-small-cell lung, ovarian and prostate cancers. Taxanes also are used "aggressively off-label," he said, for head and neck cancer and other gastrointestinal tumors.

Tocosol Paclitaxel appears to improve upon Taxol, a chemotherapeutic agent in which paclitaxel is the active ingredient. Introduced in 1993 by New York-based Bristol-Myers Squibb Co., Taxol reached peak sales of $1.6 billion in 2000 before generic competition entered the space.

Clinical studies have shown that a 15-minute administration of Tocosol Paclitaxel at a 175 mg/m2 dose results in patients receiving almost 70 percent more exposure to free paclitaxel than those receiving a three-hour administration of Taxol at the same dose. The greater intensity could translate into better efficacy. Phase II data from more than 200 patients suggested Tocosol Paclitaxel is well tolerated with a favorable side effect profile.

The administration time is shorter than that of another paclitaxel product, Abraxane, which gained FDA approval in January for breast cancer. Infused over 30 minutes, the product's response rate is almost double that of Taxol. Its developer, American Bioscience Inc., of Santa Monica, Calif., expects net sales of between $125 million and $155 million in 2005. (See BioWorld Today, Jan. 11, 2005.)

Sonus is not giving any market projections for Tocosol Paclitaxel, but the product would tap into the worldwide taxane market, which is "greater than $2.5 billion and is estimated to be growing at 15 percent a year," Martino said.

Tocosol Paclitaxel, a vitamin E-based emulsion formulation, is cremophor-free, which allows for shorter infusion times and might improve patient tolerability, reducing treatment-limiting side effects. Taxol, however, is dissolved in the solvent Cremophor-EL. In addition to causing neutropenia and other allergic reactions, solvents can leach plasticizers from the standard IV tubing and might minimize antitumor activity by trapping the active compound in the bloodstream.

An ongoing Phase II study of Tocosol Paclitaxel in metastatic breast cancer has shown an objective response rate of 53 percent in 47 patients. Updated results will be presented in December at the San Antonio Breast Cancer Symposium. "We think that the remaining development risk with this product is relatively low," Martino said, "given that what we have done is applied a novel delivery technology with an active ingredient that is well-known and well-studied."

Other Phase II studies of Tocosol Paclitaxel have shown objective response rates of 21 percent in 42 non-small-cell lung cancer patients, 33 percent in 27 bladder cancer patients, and 39 percent in 51 ovarian cancer patients.

Aside from Tocosol Paclitaxel, Sonus is applying its delivery technology to a family of camptothecin analogues, which could enter clinical studies early next year.

"This deal with Schering does give us the ability to now allocate some resources to that initiative," Martino said.