BioMarin Pharmaceutical Inc. could reap up to $257 million through a deal to out-license overseas rights to a pair of its investigational compounds, Phenoptin (sapropterin hydrochloride) and Phenylase (phenylalanine ammonia lyase).
The Novato, Calif.-based company formed the alliance with Serono SA for the development and commercialization of the product candidates, both of which have shown potential to treat phenylketonuria (PKU). Also, there is preliminary clinical evidence that suggests that the active ingredient in Phenoptin, a synthetic form of the naturally occurring enzyme cofactor 6R-BH4, also might be able to treat conditions such as diabetes and cardiovascular diseases. That product already is in Phase III for PKU under BioMarin's watch, and going forward, both companies will share its development costs equally.
"Like any company at our stage, we are having to manage our cash and burn, and we had gotten a lot of inquiries on the PKU programs," said Emil Kakkis, BioMarin's senior vice president of business operations. "We felt that they would be very attractive to partners, and that a deal would bring both expertise and commercial capabilities ex-U.S., as well as cash- and cost-sharing for a program that we hadn't actually invested that much money in but which had significant benefits."
To date, the company has spent about $12 million on Phenoptin.
BioMarin's newly appointed CEO, Jean-Jacques Bienaim, added that partnering with Serono made sense given the latter firm's operations base and experience with eight marketed products and positions in neurology, metabolism and growth disorders.
"It would be somewhat complex to set up a commercial infrastructure in Europe very quickly," he told BioWorld Today, "and to maximize the potential of this product in different European countries."
Beinaim, who has been on the job at BioMarin for two days, most recently served as chairman, president and CEO of Genencor International Inc., of Palo Alto, Calif. He walked into his new position almost simultaneous with the unveiling of the licensing deal.
Terms of the agreement give Geneva-based Serono exclusive rights to market the products in all territories outside the U.S. and Japan, in exchange for a $25 million up-front payment and additional milestone payments of up to $232 million based on the successful development and registration of both products in multiple indications. Of that total, $45 million in milestone payments is associated specifically with Phenoptin's use in PKU. That latter payout, to be made in two separate sums, would result from a regulatory filing in Europe and approval there.
Phenoptin's Phase III trial began enrollment last month, and is expected to include about 100 PKU patients who demonstrated a reduction in blood phenylalanine (Phe) levels in a Phase II screening study and who have blood Phe levels greater than 600 umol/L at baseline. The inherited metabolic disease is caused by a deficiency of the enzyme phenylalanine hydroxylase, which results in elevated Phe levels in the blood and can lead to neurological damage. The trial's primary endpoint is a comparison of Phe levels from baseline to treatment between the Phenoptin and placebo groups. (See BioWorld Today, April 8, 2005.)
No drug is approved to treat PKU, which affects at least 50,000 diagnosed patients under the age of 40 worldwide. The FDA has designated Phenoptin an orphan drug for the disease, and the international study is designed to support U.S. and European registration, Bienaim said.
In addition to sharing costs of that pivotal development going forward, both BioMarin and Serono agreed to share equally all costs following successful Phase II development for Phenoptin and Phenylase in each indication, as well as post-approval expenses. Added evaluations of Phenoptin in indications beyond PKU are allowed under a recent license from Daiichi Suntory Pharma Co. Ltd., which gave BioMarin exclusive worldwide rights (excluding Japan) for the use of 6R-BH4 to treat the endothelial dysfunction that causes vascular complications in diabetes, cardiovascular and other diseases. In return, BioMarin agreed to pay Tokyo-based Daiichi an up-front payment, an undisclosed royalty payment on sales and development milestones for up to two indications.
"It's important that Serono was interested in the other indications for BH4," Kakkis said, "not just PKU."
As a result, most of the milestone payments in the Serono deal relate to 6R-BH4's development beyond PKU. Phenylase, an enzyme-substitution therapy for severe forms of PKU, remains in preclinical development. Should the compounds reach the European market, Serono would pay BioMarin undisclosed royalties on net sales.
"They were willing to take both Phenoptin and Phenylase," Kakkis said, "so I think it makes sense to bundle those two together."
BioMarin retains exclusive rights in the U.S. The company's PKU program began less than two years ago, when Merck Eprova AG, a subsidiary of Darmstadt, Germany-based Merck KGaA, gave BioMarin the 6R-BH4 product for development to treat PKU and other genetic disease indications. More recently, BioMarin entered a partnership with Daiichi to exclusively receive preclinical and clinical data on 6R-BH4, and also gain access to the commercial-grade formulation. (See BioWorld Today, Nov. 21, 2003, and Nov. 29, 2004.)
Beyond the two PKU product candidates, its portfolio includes a pair of approved products, Aldurazyme (laronidase) for mucopolysaccharidosis I (MPS I) and Orapred (prednisolone sodium phosphate oral solution) for severe asthma. Other efforts at the company have focused on the newly renamed Naglazyme (rhASB, galsulfase), a product formerly called Aryplase, under regulatory review for MPS VI. BioMarin expects the FDA to act on the application by the end of this month, followed late this year by a European regulatory ruling. That product also could become the subject of an overseas licensing deal, Kakkis said.
In conjunction with the agreement announcement, BioMarin also reported first-quarter earnings: It recorded a $22.5 million net loss for the period ended March 31, at which time it had $62.3 million in cash reserves.
On Monday, its shares (NASDAQ:BMRN) gained 5 cents to close at $7.07. Serono's stock (NYSE:SRA) gained 10 cents to close at $15.94.