West Coast Editor
Adherex Technologies Inc. in-licensed GlaxoSmithKline plc's Phase III cancer compound eniluracil and gave GSK an option to its own Phase II oncology product, ADH-1, in an arrangement that could mean up to $220 million for Adherex.
"It ended up that they're linked, for reasons I can't go into," said William Peters, chairman and CEO of Research Triangle Park, N.C.-based Adherex, who told BioWorld Today that the potential trading of products made for a "terrific" opportunity that began with talks about eniluracil.
Also, as part of the deal, London-based GSK invested $3 million in Adherex's $9 million private placement, disclosed in late June. At the time, Adherex said the placement would be made "subject to the completion of a pending license agreement."
Adherex's stock (AMEX:ADH) closed Friday at 37 cents, up 4 cents, or 11.5 percent.
Under the terms, Adherex gets an exclusive license to eniluracil - an oral drug designed to boost the efficacy of the widely used anticancer compound fluorouracil (5-FU) - for all indications, though GSK retains options to buy back the compound at various points during its development.
If GSK exercises any of its options on eniluracil, the pharmaceutical firm will provide Adherex with milestone payments of up to about $120 million, plus up to double-digit royalties, depending upon if and when an option is exercised. On the other hand, if GSK decides not to exercise its buy-back options, Adherex would be free to develop eniluracil alone or with other partners, and would pay milestones and royalties to GSK.
GSK made 5-FU and eniluracil work in early development, but a pair of Phase III trials fizzled and the company quit trying.
"The combination turned out to be inferior to 5-FU alone, and that struck me as extraordinarily odd," Peters said, noting that the discrepancy pointed to a defect in the way the trial was conducted and evolved, and "led us to conduct a much more intensive search," he said, which yielded "additional new information" including proprietary data from inside Adherex and more.
Adherex came up with "very clear and appropriate explanations of why the Phase III trials turned out the way they did," and took the findings to GSK, Peters said. "They said, Oh, isn't this interesting,' and it allowed us to strike a deal," he said.
Adherex has filed a patent application claiming that the two drugs when used together could prove better than 5-FU alone, when Adherex's trade-secret methods are used. If that turns out to be true, the opportunity could be huge, since 5-FU is the third most commonly prescribed drug in the world - and the combination might even broaden the types of cancer that 5-FU can fight.
"I think it will be in the clinic quite soon," Peters said, targeting 2007 for Phase III registration trials. "We know an awful lot about this drug" already, he added, and GSK is "passing to us all of their data. They were gearing up to launch this as a global drug when these Phase III results turned up. They've invested a lot in this."
The second part of the deal involves Adherex's lead candidate ADH-1, also known as Exherin, which targets N-cadherin, a molecule present on certain tumor cells in a wide variety of cancers and on the established blood vessels that support tumors.
Adherex is granting GSK an option for a worldwide, exclusive license.
"We can't talk about the exact timing of that," Peters said, but if GSK exercises the ADH-1 option within an undisclosed time frame and negotiates a license agreement, Adherex would get up-front, development and sales milestone payments of up to about $100 million, plus double-digit royalties.
ADH-1 is in Phase Ib/II and Phase II trials, and might work in a variety of cancers where N-cadherin is expressed, including breast, lung, ovarian and melanoma, among others.
"We realized we needed a partner to take this into Phase III trials," Peters said, and the structure of the GSK deal allows Adherex to "maintain control and keep our momentum going."
That structure evolved naturally. As negotiations for eniluracil went forward, "our data related to ADH-1 began to appear," he said - strong Phase I results were disclosed at the American Society of Clinical Oncology meeting in May, for example - and the positive outcomes "formed a natural set of discussions between us and [GSK]," allowing for the package deal.
"There were a lot of suitors for eniluracil," Peters said. "We're systematically looking for opportunities like this. We have a lot of experience in the oncology arena, and there are a variety of drugs that for a variety of reasons big pharma or mid-size pharma don't take forward."