As its lead drug for glioblastoma multiforme continues to enroll patients in a pivotal Phase III trial, NeoPharm Inc. formed its first exclusive license agreement, signing a partner for the Japanese market.

Tokyo-based Nippon Kayaku Co. Ltd. gained exclusive development rights in Japan for IL13-PE38QQR, cintredekin besudotox, in return for an up-front licensing fee and $14 million in future milestone payments.

"We got $2 million upon signing last week, which will be amortized over the life of the license agreement," said Paul Arndt, corporate communications manager for Lake Forest, Ill.-based NeoPharm. "All development rights in Japan are picked up by Nippon, and NeoPharm gets another $2 million upon filing for registration in Japan."

A $4 million milestone payment comes when the drug is approved there and the pricing is published. The remaining milestone payments, as well as royalties to NeoPharm, are based on sales of cintredekin besudotox.

"If it's lower sales, it's probably going to be single-digit" royalties, Arndt told BioWorld Today. "If it's higher sales, it will be double digits."

NeoPharm expects to file a biologics license application with the FDA in late 2006, and a U.S. approval could come in 2007. Outside of Japan, NeoPharm owns all rights to IL13-PE38QQR, and it intends to seek partners for the product in Europe and the U.S.

"Licensing is going to be a key role for NeoPharm going forward," Arndt said. "But as of right now, it's still ours, and if we have to, we will be more than happy to market it ourselves."

A BLA would be based on results, if positive, from an ongoing Phase III trial in first recurrent glioblastoma multiforme. The PRECISE (Phase III Randomized Evaluation of Convection Enhanced Delivery of IL13-PE38QQR with Survival Endpoint) trial is a head-to-head comparison of IL13-PE38QQR with Gliadel Wafer, which was developed by Baltimore-based Guilford Pharmaceuticals Inc. It began in the first quarter of 2004 and is enrolling 300 patients. (See BioWorld Today, Feb. 9, 2004.)

"We need to show a 50 percent improvement in median survival over Gliadel Wafer," Arndt said.

A Phase I/II study of IL13-PE38QQR showed an increase in median survival was associated with optimal catheter placement in the peritumoral setting. Median survival with optimal catheter placement, using two catheters, was 70.3 weeks, compared with 41.4 weeks among patients receiving sub-optimal catheter placement, or less than two catheters. The PRECISE trial is using optimal catheter placement. Median survival with other treatments is between 20 and 26 weeks, NeoPharm has said.

As of the end of 2004, NeoPharm had accrued 100 patients in the PRECISE trial. The company expects to be fully enrolled by the end of the third quarter. A BLA filing would occur after a one-year follow up that should be completed by the end of the third quarter in 2006.

There are between 8,000 and 10,000 people diagnosed in the U.S. each year with glioblastoma multiforme, Arndt said.

NeoPharm said the key to making a tumor-targeting drug is finding the mechanism that selects tumor cells and ignores healthy ones. Cintredekin besudotox consists of the tumor-targeting molecule interleukin-13 and a cytotoxic agent, Pseudomonas Exotoxin, or PE. IL-13 receptors are found on malignant glioma cells, but not on healthy brain cells.

IL13-PE38QQR has orphan drug designation in Europe and the U.S., and fast-track designation in the U.S. The product also was selected to participate in the FDA's Continuous Marketing Application Pilot 2 Program.

NeoPharm licensed rights in September 1997 from the National Institutes of Health and the FDA to develop and commercialize IL13-PE38QQR.

The company has several other products from its NeoLipid program in clinical development, including LEP-ETU, an improved formulation of liposomal paclitaxel; LE-SN38 to treat colorectal and other cancers; and LErafAON to treat radiation- and chemotherapy-resistant tumors. Those three products are in Phase I trials.

NeoPharm resolved a consent solicitation issue in November brought on by its largest stockholder and founder, John Kapoor, who sought to remove four independent directors over concerns of the company's priorities and burn rate. As a result, two directors resigned and four joined the board. Kapoor and his wife hold about 21.7 percent of NeoPharm's stock. (See BioWorld Today, Sept. 7, 2004.)

As of Sept. 30, the company had cash and cash equivalents of $75.8 million.

The company's stock (NASDAQ:NEOL) fell 26 cents on Wednesday to close at $11.90.

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