BioWorld International Correspondent

LONDON - Arrow Therapeutics Ltd. landed its first deal, licensing A-60444, a small-molecule inhibitor of respiratory syncytial virus, to Novartis Pharma AG for a $10 million down payment and $217 million linked to development milestones, followed by royalties.

The product, discovered and developed in-house by Arrow, is in two Phase II trials that are due to report by the end of 2005.

Arrow's CEO Ken Powell told BioWorld International: "This has been a long-term development project lasting five years, and going into Phase II on our own was a major achievement. Doing a deal with one of the top five [pharma] companies validates our model and demonstrates the quality of our approach."

London-based Arrow had agreed to term sheets with several other companies, and, as a result, Novartis was prepared to do a deal in advance of the Phase II results.

"It's a very competitive world out there, and it is unusual to have something this advanced," Powell said. Novartis, of Basel, Switzerland, has taken rights to backup compounds and a right of first negotiation on follow-up compounds, also.

To get the $217 million in milestones, A-60444 will have to be registered for treating babies, the elderly and the immunocompromised - the three groups most at risk from respiratory syncytial virus (RSV).

The virus is most notorious for causing bronchitis in small children, but it is being recognized increasingly as a significant health threat to the elderly. There is no therapy for RSV in babies other than Gaithersburg, Md.-based MedImmune Inc.'s monoclonal antibody Synagis, which is effective only if given to at-risk infants in advance of infection.

Thomas Ebeling, CEO of Novartis Pharma, said A-60444 was highly differentiated and had the potential to meet significant unmet need. "RSV leads to the hospitalization of 125,000 infants in the U.S. each year and 2,500 deaths, which points to the public health issues yet to be addressed," he said.

Overall, the virus is the cause of 20 percent of lower respiratory tract infections worldwide.

"A lot of interesting things are happening with RSV, with new data saying it is important also in chronic obstructive pulmonary disease and asthma," Powell said. "There is increasing recognition of its importance by the medical community."

The first of Arrow's Phase II trials of A-60444 is running in 20 centers across Europe, treating patients who are undergoing stem cell therapy. With the RSV season running from October to May in the Northern Hemisphere, the focus of the trial now is moving to the Southern Hemisphere, where the season is from May to October, and centers in Australia are starting to recruit patients.

The second trial, in Hong Kong, is treating adults with RSV who are otherwise healthy. In adults, the virus causes cold and flu symptoms that are generally ignored or treated with self-administered over-the-counter remedies. But current concerns over severe acute respiratory syndrome and the avian flu are prompting people on the island to see a doctor if they develop any flu-like symptoms, providing a ready pool of patients.

"This has given us the opportunity to test for RSV infection and then do quantitative testing for clearance of the virus," Powell said. "Obviously, the real market is in treating small children, but you need to get data in adults first."

Arrow's technology platform, Transposon-Mediated Differentiated Hybridization, is able to identify all the genes necessary for a pathogen to survive, and rank them in terms of their relative importance for survival. In its own programs, Arrow uses that as the foundation of small-molecule anti-infective discovery, and has spun out Immunoprime Ltd. to develop vaccines based on the platform.

A-60444 is well ahead of Arrow's second program, for treating hepatitis C. That is due to enter the clinic in 2006, but Powell said there are active discussions with partners, some of which are interested in licensing it before clinical development starts.

Arrow has raised £36 million (US$64.5 million) since it was founded in 1998, including £23 million in the last round in early 2004. With Novartis taking over funding of the Phase II trials of A-60444 and the $10 million up-front payment, the company now has funding into early 2007.

"The deal puts the company on a sound financial footing and gives us strategic alternatives," Powell said. "Not having to IPO is good because at the moment pricing is so competitive - [it's] often an IPO to nowhere because you can't use a listing to raise further funds."

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