West Coast Editor

Recently a newsmaker in HIV, Gilead Sciences Inc., along with Genelabs Technologies Inc., is taking aim at another virus - hepatitis C - in a research deal valued at up to $46 million if at least one compound emerges.

Matthew Loar, Genelabs' chief financial officer, said the company previously estimated $19.5 million in cash at the end of the third quarter, which ended Thursday.

"We haven't felt any need to update that," he said. "Obviously, this partnership adds significantly to that cash balance."

Genelabs' stock (NASDAQ:GNLB) closed Thursday at $2.61, up 23 cents. Gilead's shares (NASDAQ:GILD) ended the day at $37.38, up $1.22.

Gilead is paying Genelabs, of Redwood City, Calif., $8 million up front to lead the research efforts, along with three years of funding for the work and milestone payments of up to $38 million for each compound developed by Gilead, which also will handle commercialization.

Gilead gets exclusive worldwide license rights and will pay Genelabs a royalty on sales of products arising from the deal. Without the up-front money from Gilead, "at our burn rate, we have roughly a year's worth of cash," Loar told BioWorld Today.

Specifically sought in the Gilead deal are novel nucleoside inhibitors of HCV polymerase. "We've told people that we have [the HCV program] but we haven't put a lot of information out there," Loar said, adding that "patents are just beginning to publish at this point," and competitive strategy calls for a limit to what's disclosed.

"We have effectively two programs in hepatitis C, one in nucleosides and one in non-nucleosides," he said. So far, compounds have advanced only into preclinical stages. More than 170 million people globally have chronic HCV, one of the primary causes of liver failure and transplantation in the U.S., with no preventive vaccine available.

Genelabs' main focus has been on Prestara (prasterone) for lupus, partnered in the U.S. with Corona, Calif.-based Watson Pharmaceuticals Inc. and in Japan with Tanabe Seiyaku Co. Ltd., of Osaka. Last month, clinical data were published in Arthritis & Rheumatism showing a statistically significant response compared to placebo. (See BioWorld Today, Sept. 3, 2002.)

"The FDA finished their review of the NDA and gave us an approvable letter," Loar said, but it was contingent on a study that would confirm findings related to bone mineral density from another trial. Data from the confirmatory study will be unblinded in the fourth quarter, he said.

In August, Gilead said its combination of Viread (tenofovir disoproxil fumarate) and Emtriva (emtricitabine) for HIV - approved as Truvada - showed better results in preliminary trials than London-based GlaxoSmithKline plc's Combivir, which consists of lamivudine and zidovudine in a single pill. (See BioWorld Today, Aug. 27, 2004.)

GSK, coincidentally, is partnered with Genelabs in hepatitis E, a form of the liver disease not recognized as a condition unto itself until 1980. It's caused by infection with a single-stranded RNA virus and carries a low mortality rate, although deadly fulminant hepatitis occurs in pregnancy and is associated with a mortality rate of 20 percent among women in their third trimester.

Data from GSK's HCE trial "may also come out in the fourth quarter," Loar said, noting that the study is classed as Phase II, but GSK has asked the FDA to consider it as pivotal.

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