In a deal worth $21 million in up-front and equity payments and significantly more in research funding and milestones, Sunesis Pharmaceuticals Inc. agreed with Biogen Idec Inc. to discover and develop small-molecule cancer therapeutics targeting kinases.

"It's our most significant corporate collaboration to date," said Daniel Swisher, CEO of South San Francisco-based Sunesis, which was founded in 1998. "It's important for us because we see kinases as an exciting opportunity to discover and develop drugs in cancer and in inflammation. With Biogen Idec, it gives us the opportunity to really ramp up our efforts."

Using Sunesis' fragment-based drug discovery technology - called Tethering - the parties will generate novel small-molecule leads that inhibit oncology kinase targets. Scientists from both companies will work together to identify, optimize and develop the kinase drugs, initially focusing on six targets. Biogen Idec gains worldwide rights to products that result, and Sunesis retains the option to co-develop and co-promote them.

"We have an opportunity to go country by country in terms of opting in for co-promotion," Swisher told BioWorld Today.

Sunesis will receive $7 million up-front and a $14 million equity investment from Cambridge, Mass.-based Biogen Idec. The agreement also includes four years of research funding, and pre-commercialization milestone payments and potential royalties. The royalties could escalate from a mid-single-digit to a double-digit range, increasing if Sunesis participates in the development of programs that result from the collaboration.

While the milestone amounts were not disclosed, Swisher said they are in line with Sunesis' prior agreement with Biogen Idec in which the company was entitled to about $60 million per target in pre-commercialization milestone payments.

While Sunesis needed Biogen Idec's support to expand its research in kinases, Biogen Idec needed Sunesis' technology to strengthen its current oncology portfolio.

"We are very excited about doing this deal," said Mike Gilman, Biogen Idec's executive vice president of research. "We've been working with Sunesis for a couple of years now already and we love working with those guys, and we love the technology."

The companies first forged a relationship in December 2002, when they joined to discover therapeutics to treat inflammatory and autoimmune diseases. The agreement included an up-front technology-access fee for the Tethering technology, quarterly payments and a minority equity investment in Sunesis, as well as a loan over the first 30 months of the collaboration. Sunesis stood to receive $60 million in pre-commercialization milestones per target, as well as royalty payments. (See BioWorld Today, Jan. 8, 2003.)

The recent agreement with Sunesis helps Biogen Idec not only to expand its oncology program, but also to expand its capacity and capability in the small-molecule area, Gilman said.

With the Tethering technology, Sunesis' scientists create kinase inhibitors by identifying small fragments that access the adaptive regions of a target kinase, and then linking the molecules with active fragments that access the nucleotide-binding site. So far, the researchers have focused on developing small-molecule inhibitors of Raf and Aurora kinases, the former of which is included in the company's collaboration with Biogen Idec.

Kinases are cell-signaling enzymes that play a major role in cancer progression. They are involved in a number of signal transduction processes from cell growth, metabolism, differentiation and apoptosis. Researchers have faced challenges in designing small-molecule therapeutics against kinase targets in terms of finding molecules with appropriate potency, selectivity and metabolic properties.

Aside from the collaboration with Biogen Idec, Sunesis is working on its own oncology products. Its lead compound, SNS-595, is a cytotoxic that is in Phase I development. It also has pipeline of small-molecule compounds to treat oncology and inflammation. The company has a partnership with Johnson & Johnson Pharmaceutical Research & Development, a unit of New Brunswick, N.J.-based J&J, to discover drugs for chronic inflammatory and autoimmune diseases, and a deal with Merck & Co. Inc. to discover drugs for Alzheimer's disease and viral infections. (See BioWorld Today, May 7, 2002; Feb. 20, 2003; and July 28, 2004.)

Biogen Idec is working to expand the indications of two of its marketed oncology drugs, Rituxan and Zevalin. It also has two monoclonal antibodies, IDEC 114 and IDEC 152, in the clinic for various lymphoma indications. At the earlier stage, an interferon beta gene delivery product and two other preclinical products for cancer are scheduled to enter Phase I before the end of this year.

Biogen Idec's stock (NASDAQ:BIIB) rose 43 cents on Tuesday, to close at $60.90.

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