West Coast Editor

Following Celgene Corp.'s buyout of Penn T Ltd., the worldwide supplier of thalidomide for Celgene and partner Pharmion Corp., the latter two firms are changing their deal, with Celgene getting a total of $88 million and Pharmion getting a price break on the product along with new sales territories outside the U.S.

"We do get the money up front, but it's a very good deal for both of us," said Brian Gill, director of public relations for Warren, N.J.-based Celgene, speaking from the American Society of Hematology (ASH) meeting in San Diego, where Phase III data regarding thalidomide (brand named Thalomid) were offered Monday.

The total product supply price, combined with Pharmion's royalty obligation to Celgene, drops from 36 percent to 23.5 percent of thalidomide's net sales under the new terms, which call for Pharmion to pay $77 million right away.

It allows them to work out a better deal for cost of goods, so it bodes well for them, Gill said, adding that Pharmion s efforts to win approval for thalidomide have been very successful in Austria, New Zealand, Israel and Turkey.

Also, the companies are extending from 2005 to 2007 the research and development pact for the drug, with Pharmion paying Celgene $8 million during the next three years. The deal later could be extended again.

"There's no real expiration time set here," Gill said.

The licensing arrangement was amended, too, giving Pharmion more territories and eliminating termination rights held by Celgene, which are tied to approval of thalidomide in Europe in November 2006. Specifically, Pharmion gets rights to develop and market the drug in three more Asian territories - Hong Kong, Korea and Taiwan - and is paying Celgene another $3 million.

Both firms' sales will continue by way of a controlled distribution system, such as Celgene's S.T.E.P.S., which stands for "the system for education and prescribing safety," and/or the Pharmion risk-management program. The companies entered the deal about three years ago, and that's when Celgene got the option to purchase Penn T, an arm of Penn Pharmaceutical Services Ltd., of Tredegar, South Wales. (See BioWorld Today, Nov. 20, 2001.)

Thalomid was approved in 1998 for cutaneous manifestations of moderate to severe erythema nodosum leprosum (ENL) and as maintenance therapy to prevent and suppress the cutaneous manifestations of ENL recurrence. A supplemental new drug application is under review by the FDA for the drug's use in multiple myeloma.

At the ASH meeting, Celgene reported final results from a Phase III study using thalidomide plus dexamethasone for multiple myeloma. The study reported a statistically significant difference in response rates of 63 percent vs. 41 percent (p=0.002) at four months with thalidomide plus dexamethasone vs. dexamethasone alone.

"Those data are going into our sNDA," Gill said. Interim results from the trial were presented at the American Society of Clinical Oncology meeting earlier this year, he noted.

"That created a lot of interest and usage of the combination," Gill told BioWorld Today. "If it isn't already, it is certainly becoming the standard of care for newly diagnosed multiple myeloma patients."

Pharmion, for its part, has Vidaza (azacitidine), approved earlier this year for all five subtypes of myelodysplastic syndromes. In September, the company upped sales estimates for the second half of the year to a range of $40 million to $45 million, from a previous range of $20 million to $27 million, based on greater-than-anticipated sales in the initial months of the launch. (See BioWorld Today, May 21, 2004.)

Celgene's stock (NASDAQ:CELG) fell 22 cents Monday to close at $28.38.

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