Vertex Pharmaceuticals Inc. licensed its oncology compound VX-944 to Avalon Pharmaceuticals Inc., in a deal that could provide more than $73 million to Vertex while allowing Avalon to advance its pipeline.

Terms of the agreement call for Germantown, Md.-based Avalon to hold exclusive worldwide rights to develop and commercialize the product for various cancers, though Vertex retains co-promotion rights in the U.S. and Europe. The $73 million includes an up-front fee to Vertex, as well as potential milestone payments as the product moves from clinical development to regulatory approval, said Michael Partridge, director of corporate communications for Vertex.

"On top of that, we would receive royalties," he told BioWorld Today, though terms of the royalty arrangement were not disclosed.

Partridge said Vertex was "seeking to collaborate on the development of VX-944" and saw Avalon as a "committed partner with a focus in oncology."

He added that Avalon has "the particular technology to help define the potential of [the compound] in a range of cancers, particularly in solid tumors."

For Avalon, which plans to begin Phase I trials of VX-944 in leukemia and lymphoma indications by the end of the year, the licensing agreement provides the relatively young company with a clinical-stage compound.

"It's an opportunity for us to really move our development pipeline forward," said Avalon CEO Ken Carter, adding that the company went through a "very intense search process" for either a very-late preclinical or early clinical-stage oncology compound before deciding on VX-944.

"We felt this was the best one available and started an aggressive campaign to engage Vertex in conversation," Carter told BioWorld Today.

Most of Avalon's development to date has been preclinical, but its discovery and analysis platform, AvalonRx, has "matured to the point where we think we can bring very real value in areas like patient stratification and deeper mechanism profiling," Carter said, adding that the company will apply its platform to build on Vertex's studies of VX-944 to investigate other indications, such as solid tumors.

The compound works by targeting the enzyme inosine monophosphate dehydrogenase, which controls the production of nucleotides needed for cell division, to reduce the nucleotides available to a cancer cell and inhibit cell proliferation. Partridge said Vertex's preclinical studies of VX-944 indicated "promise in hematologic cancers."

Results presented at the annual meeting of the American Society of Hematology in December demonstrated that the compound inhibited the in vitro proliferation of lymphoid and myeloid cells common to leukemia. Vertex also reported prolonged survival in a model of aggressive mouse leukemia. A single-dose Phase I study of VX-944 indicated the drug to be well tolerated and orally bioavailable.

In addition to VX-944, Cambridge, Mass.-based Vertex has a number of other drugs in its pipeline, including two products for hepatitis C. VX-950, an HCV protease inhibitor, is in a Phase Ib study - the first study involving patients. Results of the study are expected during the second quarter.

Vertex has retained rights to VX-950, except in Japan and the Far East. The company in June signed a deal with Mitsubishi Pharma Corp., of Tokyo, which purchased rights to develop and commercialize the drug in those areas. That deal could be worth up to $33 million for Vertex.

The company's second hepatitis C product, merimepodib, is in Phase IIb trials in patients who did not respond to standard-of-care treatment. Results are expected later this year. Merimepodib also is being investigated in a 28-day study in combination with ribavirin.

Vertex reported a net loss of $42.8 million for the quarter ending Dec. 31. The company had a total of $392.3 million in cash, cash equivalents and available-for-sale securities.

Shares of Vertex (NASDAQ:VRTX) closed at $11.43 Tuesday, up 23 cents.

While further developing its newly acquired cancer compound, Avalon will continue screening potential targets with its discovery platform. AvalonRx has two parts to its high-throughput screening process: One part looks at how a particular genome reacts to individual drugs, which allows researchers to made predictions regarding efficacy, and one part identifies oncogenic targets. The company hopes to designate a second late-stage preclinical candidate later this year.

Avalon also collaborates with several other companies in drug discovery. In October 2003, the company entered an agreement with Princeton, N.J.-based Medarex Inc. for the development of antibody products. Financial terms were not disclosed, but the deal called for the companies to share the cost of development and commercialization of products targeted by Avalon and analyzed using Medarex's UltiMAb Human Antibody Development System.

Avalon signed an agreement with Sanofi-Aventis Group, of Paris, in December 2003 to collaborate on the identification, discovery and validation of druggable screening targets.

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