Newly formed iCo Therapeutics Inc. placed the first product in its ophthalmology pipeline by licensing a second-generation antisense drug from Isis Pharmaceuticals Inc. to develop for diseases such as age-related macular degeneration and diabetic retinopathy.

Specific terms were not disclosed, but iCo will gain exclusive worldwide rights to ISIS 13650 in exchange for an up-front fee consisting of cash and a promissory note that is convertible into iCo equity. The deal also includes milestone payments and royalties to Isis.

The collaboration is the first for Vancouver, British Columbia-based iCo, which describes itself as a "no research, development only" company focused primarily on ocular diseases, though indications could eventually expand to include spinal cord, joint and other areas.

"The notion of the company," CEO Andrew Rae said, is to take drugs that have been developed by third parties and focus on the nonsystemic delivery of those drugs to isolated environments. "We're looking at re-dosing and reformulating drugs, and layering additional intellectual property onto pre-existing compositions of matter," he said.

That strategy allows iCo to make use of generics, as well as drugs that are still under patent, and those that are being tested in the clinic for other indications. Rae said the company looks for products that aren't approved, but have demonstrated safety and efficacy in human studies, or, at the very least, have established safety and pharmacokinetic data at the preclinical stage. The compound from Isis has been tested in preclinical studies, and iCo plans to file an investigational new drug application and begin clinical testing next year.

The economic advantages of iCo's business model are obvious, Rae said. "We're shaving the first five-plus years of development in moving the therapeutics forward, and we're offering investors a reduced path to liquidity" - either through an initial public offering or potential acquisition.

iCo's focus in ophthalmology also lands it in the middle of a market that has been heating up since the approval late last year of New York-based Eyetech Inc.'s Macugen for wet age-related macular degeneration (AMD). Other companies - most notably San Francisco-based Genentech Inc. with its late-stage candidate Lucentis - are moving toward regulatory approval.

The ocular space overall is "of great interest," Rae told BioWorld Today. "There's little background noise in terms of companies that are in the ocular space, and drug delivery is changing. We believe there's still opportunity to differentiate the products in the space, and we're looking at delivery aspects, dosing aspects and the timing of delivery and dosing."

With ISIS 13650, iCo initially will target ocular angiogenesis, the formation of new blood vessels in the eye associated with AMD, as well as diabetic retinopathy, a complication of diabetes that leads to damage in the small blood vessels in the eye. ISIS 13650 is an antisense drug designed to inhibit c-Raf kinase, an enzyme in the signal transduction pathway that is triggered by vascular endothelial growth factor and other growth factors.

The goal of iCo, which gets its name partly from the focus in ocular diseases and partly from the company's goal to affect isolated biological environments - meaning drugs that can be locally administered with minimal systemic distribution - is to create a pipeline dealing with two categories of eye diseases: back-of-the-eye diseases like AMD, and front-of-the-eye diseases such as ocular inflammatory conditions, Rae said.

"As far as we know, we're the only company to date that focuses on re-profiling drugs in an ocular setting," he said.

iCo was founded in March by Rae, along with John Clement, chief technical and development officer, and John Meekison, chief financial officer. It is Rae's third start-up company. He previously founded Ability Biomedical Corp., also of Vancouver, which was sold last year to Princeton, N.J.-based Medarex Inc. for $4.7 million. (See BioWorld Today, June 28, 2004.)

Though the company recently added Chief Scientific Officer Santa Ono to its executive staff and has plans to hire a chief medical officer, iCo outsources most of its work. And, since the company has no research program, most of its efforts are concentrated on business development, corporate finance, clinical regulatory operations and manufacturing.

The company has not disclosed how much money it has raised to date, but Rae said funds "have been sufficient for initiating the first licensing activity," and iCo expects to announce additional fund-raising efforts "in short order" to coincide with other licensing deals.

iCo's licensing partner, Isis, however, recently completed a financing round, raising $51 million through the private placement of 12 million shares at $4.25 each. Proceeds are expected to support research, drug discovery and development activities relating to Isis' antisense pipeline. (See BioWorld Today, Aug. 25, 2005.)

Following news of the iCo deal, shares of Isis (NASDAQ:ISIS) closed at $5.05 Thursday, unchanged.

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