Freeing up resources for its internal HIV and antibacterial compounds, Achillion Pharmaceuticals Inc. partnered its hepatitis C virus program with Gilead Sciences Inc. for up to $110 million in payments if one product reaches the market.

The lead product is slated for an investigational new drug application filing in the middle of 2005. The agreement gives Gilead exclusive worldwide rights for the research, development and commercialization of the HCV compounds.

"What this Gilead agreement does for us is several things," said Michael Kishbauch, CEO of New Haven, Conn.-based Achillion. "It brings us together with an organization whose accomplishments in the overall field of virology are quite outstanding. It brings us together with a company whose vision of treatment for hepatitis C is very consistent with ours. Thirdly, it brings us together with an organization whose valuing of our program has helped us meet specific strategic and monetary needs for the organization."

With the HCV program partnered, privately held Achillion intends to use its resources to advance its lead product, elvucitabine, into clinical trials for HIV infection near the end of 2005, and to move into the clinic a lead antibacterial compound for methicillin- and vancomycin-resistant hospital infections around the same time next year.

In the agreement with Gilead, Achillion will continue development of the compounds through completion of a proof-of-concept clinical study in HCV-infected patients. Gilead is assuming full responsibilities and costs associated with development and commercialization for compounds that warrant further development.

"We believe that Achillion's program is complementary to Gilead's own internal research programs as well as collaborative programs with Genelabs," said Erin Edgley, Gilead's manager of public affairs.

Foster City, Calif.-based Gilead partnered a few months ago with Genelabs Technologies Inc., of Redwood City, Calif., in a research deal for novel nucleoside inhibitors of HCV polymerase. The deal is worth up to $46 million for Genelabs if one compound emerges. (See BioWorld Today, Oct. 1, 2004.)

While Gilead has a marketed hepatitis B product, Hepsera, its active search for effective therapies for hepatitis C has led to the Genelabs and Achillion agreements.

"Our primary focus is to work with Achillion on the identification of a lead candidate with the profile required to advance toward the clinic," Edgley said.

Terms call for Achillion to receive a $5 million up-front license payment and $5 million through an equity purchase. Gilead will provide partial funding through the completion of the proof-of-concept study. Achillion could earn milestone payments in excess of $100 million based upon the achievement of certain development, regulatory and commercial goals.

"If there are multiple related compounds that come from this transaction, which is obviously our goal, it could rise substantially above $100 million," Kishbauch told BioWorld Today.

Achillion also will have the option to participate in U.S. commercialization of the products that come out of the collaboration. Gilead will hold exclusive worldwide rights and will pay Achillion a royalty on net sales of any future products.

While Kishbauch could not give further details on the royalty structure, he did say they were an important aspect of the collaboration and that the market is large.

"I think that most people who follow this market believe that with an effective and well-tolerated agent that, in particular, provides tolerability advantages over existing therapies, you're looking at a market that is above $1 billion in worldwide sales," he said.

The small-molecule HCV inhibitors are believed to act through a mechanism of action involving HCV protease, but they are not direct protease inhibitors. At the preclinical stage, they have shown their ability to inhibit HCV replication. Both Gilead and Achillion believe that the disease will best be treated through combination therapies, Kishbauch said.

Achillion launched its HCV program in the first half of 2002, and it selected a few potential lead compounds in early August. The company plans to submit an investigational new drug application around the middle part of 2005.

The company's HIV product, elvucitabine, will enter a 12-week Phase IIb trial early in 2005. That trial should be completed by the end of the year, when the company can move it into Phase III trials. The product is a L-cytosine nucleoside analogue that has significant advantages in terms of half-life and might provide practitioners with dosing flexibilities, Kishbauch said. Achillion owns all rights to the product.

"We're keeping our options open on that one," Kishbauch said. "The nature of many anti-infective therapies is such that one need not plan for a huge commercial infrastructure to launch those kinds of products."

Gilead has a strong presence in the anti-infective market with seven approved products, including Truvada, Viread and Emtriva for HIV, AmBisome for systemic fungal infections, Hepsera for hepatitis B, Tamiflu for influenza A and B, and Vistide for cytomegalovirus retinitis in patients with AIDS.

Gilead's stock (NASDAQ:GILD) dropped 35 cents on Monday, to close at $34.16.

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